Self‐Help Group‐Bank Linkage Programme as Driver of Rural Financial Inclusion: A Conceptual Analysis and Enhanced Framework

ABSTRACT Self‐Help Group (SHG)‐Bank Linkage Programmes have emerged as an important mechanism for promoting rural financial inclusion by connecting underserved communities with formal banking institutions. Despite significant progress in expanding banking outreach, many rural households, particularly women and low‐income groups, continue to experience barriers in accessing formal credit, savings facilities, and financial services. This study examines the role of SHG‐Bank Linkage Programmes in strengthening financial inclusion through a conceptual analysis of existing research, institutional reports, and secondary evidence. The study focuses on four major dimensions: access to formal credit, savings behaviour and financial literacy, women's empowerment, and community‐level economic development. The analysis highlights that SHG‐bank partnerships reduce credit barriers through collective savings, peer accountability, and group‐based lending mechanisms. These programmes also contribute to women's economic participation by improving financial confidence, leadership capacity, and involvement in household and community decision‐making. However, challenges such as regional disparities, digital barriers, uneven SHG performance, and sustainability concerns remain significant. Based on the evidence reviewed, the study proposes an enhanced SHG‐Bank Linkage framework incorporating digital financial services, financial literacy initiatives, entrepreneurship support, and stronger institutional coordination. The proposed framework provides a conceptual pathway for strengthening inclusive and sustainable rural financial systems. The result shows that the enhanced version of the model achieves better financial reach by expanding credit access for SHG members from 58% to 85%. The future scope of SHG‐Bank linkage programmes lies in leveraging digital technologies to expand outreach and enhance financial literacy, thereby deepening financial inclusion in rural areas.