Asymmetric Information in Rural Financial Markets and Interlinking of Transactions Through Self-Help Groups

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One of the issues contending the rural borrowers, who are composed of small entrepreneurs, fishermen and farmers, is the access to financial services of formal financial institutions. With this fact on hand, this article discusses the issue within the framework of asymmetry of information existing in rural financial markets. It shows that the observed interlinking transactions between banks and various self-help groups provides a mechanism to ensure access to bank credit.