Abstract
Microfinance has emerged as an important instrument for promoting financial inclusion and accelerating rural development in developing economies. In India, Self-Help Groups (SHGs) have played a significant role in extending financial services to economically weaker sections, particularly in rural areas. The present study examines the role of microfinance in promoting rural development through SHGs in Punjab, India. The study investigates the impact of microfinance on income generation, employment opportunities, savings behavior, asset creation, financial inclusion, and the socio-economic empowerment of SHG members. Primary data are collected from SHG members using a structured questionnaire, while secondary data are obtained from published reports, journals, and government publications. Descriptive and inferential statistical techniques are employed to analyze the data and assess the relationship between microfinance and rural development indicators. The findings reveal that access to microfinance has contributed positively to improving household income, enhancing savings habits, generating self-employment opportunities, and strengthening the economic and social status of rural households. Furthermore, participation in SHGs has improved financial awareness and encouraged greater involvement of members in economic decision-making. The study concludes that microfinance serves as an effective tool for rural development and financial inclusion in Punjab. The findings provide valuable insights for policymakers, financial institutions, and development agencies to strengthen microfinance programs and promote sustainable rural development.
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