Significance of the Microcredit Delivery Models for Livelihood Upgradation: A Comparison Between SHGs–Bank Linkage Model and Micro Finance Institutions Model with Case Studies from Rural West Bengal, India

Abstract

Microfinance is seen as a useful way to alleviate the financial problem of the rural poor. In India, SHG bank linkage (SBL) programme and the Microfinance institution (MFI) are two main sources of microcredit. This article aims to compare the importance of the credit delivery processes under these two types of microfinancing approaches in ordering the livelihood of the recipients. For this purpose, a set of indicators are chosen from different domains of livelihood. Information is collected through a primary survey in some selective villages of West Bengal, India and is analysed using different statistical techniques. It is found that the MFI recipients experience better impact than SBL recipients though the SBL’s recipients have greater improvement in cases of savings habit, mobility, and access to the health. Besides, the number of loans received and the mode of utilisation of the credit are observed as the most significant factors influencing the livelihood outcome in both cases.