The Hindu Business Line : `Urban self-help groups must get interest subsidy'

THE interest subsidy (Pavala Vaddi) scheme should be extended to the urban self help groups (SHGs) which are regular in loan repayments to the Banks under the Indira Kranthi Padhakam (Urban) scheme, the Andhra Pradesh Chief Minister, Dr Y.S. Rajasekhara Reddy, said.

The State Government had recently decided to rationalise the interest subsidy scheme to women SHGs from July 2005, and ensure that they uniformly pay just 3 per cent interest rates on loans taken from the Banks. Almost three lakh women self-help groups benefit at present.

The SHGs received a bank linkage of Rs 1,244 crore during 2004-2005 as against Rs 753 crore in the previous year. Nabard proposes to add another 1.5 lakh women groups under bank credit umbrella this year.

Reviewing the performance of SHGs, the Chief Minister said this step would reinforce the repayment behaviour in the SHGs and also enable them to come out of poverty cocoon by investing adequate amount with the loans with least interest rate.

The Chief Minister directed the officials to strengthen the urban self help groups after building requisite capacities, as was done in the case of Indira Kranthi Padhakam in rural areas.

He also said neighbourhood groups should be formed out of SHGs. Hitherto they were formed without insisting on thrift and credit.

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