Self Help Groups India

Analysis of SHG Bank Linkage Programme in Andhra Pradesh 2011

By Deepti Kc, Amulya Champatiray, Researchers, IFMR-CMF

Self Help Group members

The Andhra Pradesh government while promulgating the MFI Ordinance also stated that it has a mandate to disburse INR 100,000 crores bank loans to SHG women members by 2014 to bring 10 million families out of poverty indicating government’s strong belief in serving the needs of the poor through Self Help Group (SHG) model.

The SHG model has been regarded as an instrument for the empowerment of poor and marginalized sectors as SHGs enable women to their savings and to access the credit which banks are willing to lend. Andhra Pradesh has been proactive about taking an initiative of total financial inclusion through SHGs. Recently, the groups had been given large loans up to INR 0.75 million in order to help them discharge all their other loan liabilities and replace it with the low cost loans from the banking system. Study found that even though SHG members discharged other loans taken at higher rates of interest immediately, however, after 9-15 months, these members had incurred new debts outside the SHGs. The more alarming concern has been the increased levels of default. SOS 2010 report indicates that AP banks typically mentioned recovery levels of between 80-85 percent of loans. On an outstanding loan level of more than Rs 100 billion in the state of AP, a 15% default is highly significant.

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