The Hindu Business Line : Major banks plan to fund SHGs in AP

Encouraged by an experiment done by a grameen bank in Karimnagar district, major bankers in Andhra Pradesh have decided to seriously consider extending loans to self-help groups (SHGs) at `pavala vaddi' (three per cent interest rate) against 36 per cent by microfinance institutions (MFIs).

The idea is to help the SHGs retire high-cost loans, bringing in a great relief to the members who are often fleeced by some MFIs.

Identifying the loans to SHGs as an evolving portfolio with immense potential, Deccan Grameen Bank had given away loans to the tune of Rs 54 lakh to 17 groups, covering all 262 families of a Chenchula Cheruvu Palle village in Karimnagar district.

"The members have repaid high-cost loans (at 36 per cent interest rate) to the tune of Rs 24 lakh. This resulted in a saving of Rs 225 for each family," Mr Vijayakumar of Indira Kranthi Patham (formerly Velugu) told a review meeting of State-Level Bankers Committee (SLBC) meeting.

This model would now be replicated in 150 villages in four districts.

The Chief Minister, Dr Y.S. Rajasekhara Reddy, who chaired the meeting, immediately asked the bankers to take this up in entire State.

Dr K. Ramakrishnan, Chairman and Managing Director of Andhra Bank and Chairman of SLBC, said that the committee would examine Deccan Grameen Bank's experiment in the next 10 days and take a decision.

Performance

Earlier, updating the performance of banks vis-à-vis targets for SLBC members, Dr Ramakrishnan said that the banks disbursed Rs 26,759 crore up to December 15, achieving 72 per cent of the target set under the Credit Plan for the fiscal.

The banks disbursed Rs 14,864 crore to the agricultural sector, constituting 72 per cent of the annual target.

On the relief package announced by the Prime Minister Dr Manmohan Singh, the banks are finalising interest waiver and reschedule of loans in 16 districts.

On financing new farmers, the SLBC included 18.92 lakh farmers against the target of 12.98 lakh.

More Stories on : Credit Market | Andhra Pradesh

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