Linkage with microfinance is the latest amongst the series of efforts aimed at reforming credit cooperatives in favour of the poor. The article is an attempt to identify and discuss some of the relevant conceptual and policy issues and the emerging lessons of the adoption of microfinance by cooperatives with a focus on the Self-help group (SHG)-Bank Linkage Programme (SBLP) in India. The findings reflect the severe constraints of cooperatives in realizing the twin goals visualized of the linkage viz. inclusion and sustainability. Despite a few noteworthy efforts by the cooperatives, the overall results of the linkage leave much to be desired. Constraints of policy and organizational abilities of cooperatives for adoption of microfinance, not to mention certain inherent limitations of microfinance, have been identified as factors influencing the observed performance. Theoretically, the article points to a possible overriding effect of the historical dilemma of elite capture on the role of cooperatives.
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