Formation of Self-help Groups (SHGs) in rural areas to generate microcredits has become viable units to support various activities related to agriculture, dairy, fishery, and rural industrial enterprises. Besides, it has limited focus on natural resource conservation and management. This paper attempts to examine the spread and performance of SHGs and their role in generation of microfinances to link activities under natural resource management programmes in Karnataka, India. The micro level study was conducted in five Village Forest Committees and 11 SGHs to review the performance of SHGs in linking microcredits and natural resource management. The study demonstrates that SHGs are the best formal micro level finance institutions to generate additional employment and income for needy people by involving them in planning, decision making and management of sustainable natural resource beside considering few issues and dilemma suggested in the paper. Study data indicated that in five VFCs, their savings were used to undertake soil conservation work, value addition of forest product to enhance further their income, and to cultivate medicinal plants. Thus, the reliance of these people on forests, though not reduced to a great extent, has improved the forest conditions through various activities in addition to enhancing their income.
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