Women's Enterprise Funds Diverted to Domestic Needs: Govt Review

By: Women Entrepreneurs Review Team | Friday, 5 June 2026

An evaluation commissioned by the government has revealed that most women’s Self-Help Groups (SHGs) under Deendayal Antyodaya Yojana - National Rural Livelihood Mission (DAY-NRLM) were unable to translate programme funding into sustainable enterprises activities.

Based on responses from a survey of 2,206 households in 11 states and two Union Territories, highlighted that SHG-linked bank loans were commonly used to domestic priorities. Of the 2,206 households surveyed, about 86 per cent (1,895 households) availed benefits of the NRLM.

The report noted that revolving fund of ₹20,000–₹30,000 per group was frequently diverted towards domestic and consumption-related needs rather than business creation.

Titled ‘Evaluation of Centrally Sponsored Schemes in Package 5–Rural Development Sector’, the study highlights that implementation teams faced pressure to rapidly expand SHG coverage to achieve programme targets, including in villages with limited entrepreneurial and livelihood potential.

It showcased that the bank financing availed by SHG members was commonly directed toward housing improvements, sanitation facilities, healthcare needs, and similar non-enterprise expenditure.

Key Highlights:

• SHG funds diverted to household use, weak enterprise uptake
• Low loan access due to market risks and repayment fears
• Govt review to impact DAY-NRLM future post-2026 evaluation

The report notes, “Only a small proportion of SHGs have initiated group-level enterprises, and nearly half did so without accessing loans. This is primarily driven by the pressure to form SHGs after the PIP [Participatory Identification of the Poor] exercise to meet targets, despite a significant disconnect between SHG formation and the availability of viable business opportunities in rural areas,”

The review carries strategic importance as the Finance Ministry has mandated that all centrally sponsored schemes undergo an independent third party evaluation before any extension beyond March 31, 2026. The findings will play a key role in determining the future structure and continuation of DAY-NRLM during the 16th Finance Commission cycle beginning in April 2026.

The report states, “Many SHG members are reluctant to take loans because there is no assured market for the products made through group enterprises. Due to this uncertainty, they fear being unable to repay the loan, discouraging them from borrowing.”

“While access to RF was reported by 74.6 per cent of respondents in 13 surveyed states, just 49.9 per cent of respondents reported receiving the CIF, 41.8 per cent had access to bank loans, and only 3.8 per cent reported access to the CEF. “This was primarily due to limited on-ground support from VOs [village organisations], CRPs [community resource persons], and CLFs [cluster-level federations] coupled with the fact that only 15 per cent of the SHGs had initiated group enterprise activity,” noted the report.

The evaluation was conducted by Sambodhi Research and Communication Pvt. Ltd., a research and advisory firm engaged by NITI Aayog’s Development Monitoring and Evaluation Office (DMEO). Introduced in 2011 as NRLM and renamed DAY-NRLM in 2016, the programme promotes rural livelihoods by organising women into SHGs and linking them to finance, markets, and government support systems.