The Hindu Business Line : `Banks must ensure viability of self-help groups'

(From left) Prof M.S. Swaminathan, Chairman, M.S. Swaminathan Research Foundation; Mr A.K. Purwar, Chairman, State Bank of India; and Ms Ranjana Kumar, Chairperson, Nabard, at the national meet on job-led economic growth in Chennai on Sunday. — Shaju John

Chennai , July 18

FROM self-help groups (SHG) to sustainable self-help groups. Having expanded the numbers of women SHGs, banks now need to ensure their long-term viability.

A two-day consultation by leading bankers, officials and beneficiaries at the M.S. Swaminathan Research Foundation will discuss measures to ensure sustainability of SHGs that have contributed significantly to the rural economy.

Addressing the inaugural session here today, the chairperson of the National Bank for Agriculture and Rural Development (Nabard), Ms Ranjana Kumar, said that banks have disbursed Rs 3,904 crore as credit to 10.7 lakh SHGs, benefiting over 167 lakh poor families.

SHGs promote the concept of saving and money management by lending money within themselves. The banks step in to provide additional credit and help them set up small businesses. Now, these are emerging as financial intermediaries with some banks involving them in loan recovery. Private companies were utilising SHGs through direct marketing, she said.

SHGs offer the banks an opportunity to widen their reach in extending credit. Linking SHGs to banks has helped to create a supplementary structure to reach the poorest sections of the society.

The national consultation on job-led economic growth `Towards an era of sustainable self help revolution' is being organised to commemorate the birth centenary of J.R.D. Tata.

Mr A.K. Purwar, Chairman, State Bank of India, said that SBI was targeting credit linkage to 2,00,000 SHGs this year and by 2008, it will link one million groups. As of now, it has extended Rs 642.87 crore to 1,81,726 groups. Recovery was close to 98 per cent and the banks were willing to increase their support.

However, the concept has spread mostly in the southern States and there was some progress in Maharashtra and Orissa.

The M.S. Swaminathan Foundation has to take steps to spread the concept wider, he said.

Delivering the presidential address, Prof M.S. Swaminathan, Chairman, MSSRF, said that the SHGs must be market driven to sustain themselves in the long run. "The SHGs should not become a numbers game and banks should ensure that they are economically viable."

The banks can help by bringing down transaction cost. SGHs are an important tool in tackling social issues, and the concept should also be extended to men. Men's role in rural economy can be expanded and they can be roped in to effectively deliver various Government schemes. They can operate schemes such as the food for work programme, community grain banks and fodder banks, he said.

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