Empowering Communities The Role of Self-Help Groups in Access to Credit

G.P. Upadhayay

G.P. Upadhayay, Cabinet Secretary & Principal Chief Investment Advisor for the Government of Sikkim, recently spoke at the 4th Elets BFSI Gamechanger Summit, took place on 9-11th June 2023 in Goa. He talked about his experiences with banking and financial inclusion in India, and also emphasised the importance of innovation and the need for continued efforts to improve the lives of common citizens.

In a remarkable display of dedication and innovation, Mr. Upadhayay shared his early career experiences and shed light on a transformative initiative he spearheaded. He described an instance where a large sum of money was to be distributed to about 300 people as land compensation, and instead of giving the money in cash, as was the norm, he convinced the recipients to open bank accounts and deposit the money there. This initiative not only fostered financial inclusion but also encouraged a habit of savings among the recipients.

He also highlighted the role of digital operations in government work. With the advent of technology, the government has been able to eliminate a significant amount of leakage and ghost beneficiaries in public money distribution. However, he also warned about the potential dangers of technology, such as data security and fraudulent activities.

In the past, he observed governments functioning where salaries were distributed in cash. However, as time passed, they gradually transitioned to issuing salaries through cheques. Nowadays, all salaries are deposited directly into bank accounts.

The significant advantage of this digitization of banking operations is that whenever the government intends to undertake an action, banks become government partners and offer their valuable services. In numerous government schemes across various states, public funds are distributed in the form of scholarships, subsidies, and other forms of assistance. The bank accounts, which are linked to Aadhar for digital money transfers, have reached a stage where they have significantly reduced instances of leakage or fraudulent beneficiaries. The current level of digital operations has made conducting government affairs easy, convenient, and reliable.

Upadhayay also spoke about the role of women’s self-help groups in extending credit. He cited an article by senior Mr. Amarjit Sinha, which stated that in the last 10 years, 90,000 self-help groups (SHGs) in the country have drawn credit of almost 6.5 lakh crore, with an NPA percentage of less than two per cent. He emphasized the need to trust these groups, as they have proven to be diligent borrowers.

He also mentioned that with the rise of technology, the government is considering the necessity of enhancing safety measures, and soon people can expect a new act to replace the existing IT act. The work on this has already commenced. Additionally, there are plans for the introduction of the Personal Data Security Act, which is currently being prepared. As technology continues to advance rapidly, one must remain highly vigilant and alert to these developments.

In his address, Upadhayay also made a request to banks and financial institutions to conduct financial literacy sessions in schools. He believes that students should be educated about banking operations, the role of banks in the economy, and the concept of insurance. He also stressed the importance of teaching students about cybersecurity and the potential for fraud.

In conclusion, Upadhayay urged everyone to help the government in spreading financial literacy, especially at the lower level, to make the country strong and resilient.

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