Catalysts of change? Analyzing the impact of self-help groups in North East India's development landscape

This study provides a comprehensive examination of financial inclusion in India, with a dual focus on the disbursement of loans to Microfinance Institutions (MFIs) and the socio-economic impact of Self-Help Groups (SHGs), specifically highlighting the extent of bank-SHG linkages. Employing a rich dataset spanning 15 years sourced from the National Bank for Agriculture and Rural Development (NABARD), our analysis reveals the central role of commercial banks in facilitating access to financial resources for both MFIs and SHGs, notably contributing to 50% of loan disbursements to MFIs. Moreover, we discern distinct patterns in loan disbursements that correspond with the onset of the COVID-19 pandemic, signalling a temporary decline during the pandemic followed by a post-pandemic resurgence, reflecting the adaptive financial needs of businesses and households amidst the pandemicinduced economic upheaval. Concurrently, our research unveils substantial regional disparities in savings behaviour, with the southern region demonstrating notably higher savings levels when contrasted with the North Eastern Region. This disjunction underscores the imperative for tailored financial inclusion strategies in the latter, underscoring the exigency of region-specific approaches to foster economic growth and stability. Therefore, our findings reveal the transformative potential of SHGs in synergy with commercial banks for catalyzing socio-economic development, all the while calling attention to regional variations in financial habits that necessitate due consideration for achieving comprehensive financial inclusion and sustainable economic development across India.