The Hindu Business Line : Banks reach out to urban needy via SHGs

Vidya Khustale, a resident of Ghatkopar, a suburb in Mumbai, has taken a loan of over Rs 1 lakh for her son’s engineering studies from State Bank of India. She is now planning to avail herself of another personal loan from the bank for buying a new sewing machine for her husband’s tailoring shop.

Nothing unusual about this, except that it would have been tough for her to get the loan if she were not part of the Self Help Group (SHG) formed by State Bank of India.

The group, which consists of 15 women, was formed four years ago, with a savings of Rs 50 per month, per member. So far, it has availed a loan of Rs 1.25 lakh from SBI, of which it has already repaid Rs 65,000. The monthly repayment is about Rs 3,500 per month. After all expenses, the group is able to save about Rs 1,500 per month.

SBI has over 7,000 SHGs in Mumbai alone, of which 2,000 have availed loans, totalling about Rs 10 crore.

“About 20-25 per cent of the SHG members do become our customers and avail loans,” the SBI official said.

Tougher task

As an officer of a public sector bank pointed out, “In villages it is easier to contact people and form groups. In cities, it is more difficult. Besides, in rural areas it is easier to identify activities that banks can lend money to.”

Hawkers’ group

Some banks are targeting groups of people who are linked together by occupation, in tie-ups with associations. For instance, Union Bank of India recently tied up with the Hawkers’ Association of Mumbai and opened no-frills accounts for about 60 hawkers. Next step is to form a SHG for hawkers, said Mr G.S. Mehta, General Manager, Priority Sector, Union Bank of India.

Explaining the difference between urban and rural SHGs, Mr Mehta said, “In rural areas SHGs provide a sense of self reliance and independence to the members, who are mainly women. But in urban areas SHGs help the women in adding to the family income.”

Similarly, Syndicate Bank also opened 800 savings bank accounts for housemaids over the last one month in different part of Mumbai.

More Stories on : Credit Market | Urban Development | Public Sector Banks

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