Self-Help Groups as Catalysts for Financial Inclusion: A Multidimensional Study from Rural Andhra Pradesh, India

Abstract

The primary objective of Deendayal Antyodaya Yojana–National Rural Livelihood Mission’s (DAY–NRLM) is to mobilize rural poor households into Self-Help Groups (SHGs). This study was conducted to find the role of SHGs in financial inclusion of members. The present study was purposively conducted in Andhra Pradesh, covering four districts through proportionate random sampling. A total of 120 respondents were randomly chosen, with 15 SHG members and 15 non-SHG members from each district. Both exploratory and descriptive research designs were employed. A financial inclusion index (FII) was developed for the study using eight dimensions and fourteen indicators. Weights were assigned based on expert judgments inputs. The results revealed that the mean FII was higher for SHG members (0.742) compared to non-members (0.375). A significant difference was observed between the two groups, with a magnitude of 17.921. While SHG members generally exhibited medium to high levels of financial inclusion, non-members were largely concentrated in the low to medium range. This study finds that variables like proximity to financial services affects the financial inclusion along with credit facilities, annual income, risk orientation are associated with financial inclusion. It recommends to link left out SHGs to financial institutions to improve their effectiveness.