Financial Inclusion through Self-Help Groups in Haryana: A Conceptual Comparison of Government-Promoted and NGO-Led Models

The concept of financial inclusion is seen as an integral part of development and sustainability in developing countries. It seeks to offer inexpensive, convenient, and appropriate financial services to all segments of society, especially economically disadvantaged and socially marginalised communities. In India, the Self-Help Groups (SHGs) scheme has come to be one of the most successful initiatives for the cause of financial inclusion, poverty alleviation, increased female economic participation, and improved livelihoods. Both government-sponsored SHGs through DAY-NRLM, as well as NGO-backed SHGs, have played a significant role in increasing access to formal financial services among rural households. However, there is a significant difference between these two institutional forms with respect to governance systems, operational practices, institutional support, community involvement, capacity-building processes, and sustainability. There is a substantial amount of work on financial inclusion with the use of traditional indicators such as savings and credit, not much effort has been made regarding the new aspects of financial inclusion such as financial literacy, digital financial inclusion, institutional support, social capital, financial capability, and sustainable livelihood development. This research paper depicts an integrated theoretical framework is designed to investigate the impact of SHGs sponsored by the government and NGOs on the process of financial inclusion in Haryana State of India. Based on Financial Inclusion Theory, Social Capital Theory, Institutional Theory, and Capability Approach, the research suggests that financial literacy, institutions, saving activities, access to credit, digital finance, capacity building, and social capital operate as important mediating factors between SHG membership and financial inclusion results. The contribution of the paper to the literature lies in bringing together various theoretical concepts under one conceptual framework and comparing the two approaches for promoting SHGs, i.e., the government approach and the NGO approach. This conceptual framework would have practical implications for policymakers, financial institutions, development agencies, and NGOs trying to enhance financial inclusion programs through SHGs in Haryana and other socio-economic environments alike. Future research directions have been provided in this study for empirical testing of conceptual relationships.