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SELF-HELP Groups run by women are a classy innovation in the rural credit delivery system for which probably no organised banking institution, including RBI and Nabard, can take any credit.

With entirely indigenous roots, the idea has helped poor rural women to come together and organise quick funds to meet their consumption needs. NPAs are nil. Today, women in some States such as Andhra Pradesh, Karnataka and Maharashtra can stand up and not kowtow to callous husbands and bankers to meet their financial needs. This has to be seen and experienced in the villages.

One is not sure whether the members of the high-level RBI group set up to look into micro-finance institutions ever sat with these women on mud floor to get a feel of their emotions.

Again one is not sure if any of these unfortunate women, trying to build bright days for themselves sans the help of Bollywood bankers, have worked on the committee.

Four sub-groups, - - one each under Dr Nachiket Mor, ED, ICICI Bank; Mr V.K. Chopra, ED, OBC; Mr A. Vikraman, CGM, SIDBI; and Mr N. Kanthakumar, ED, Canara Bank - - have submitted their reports, which if taken seriously, could effectively decimate SHGs.

The Mor group has suggested "interest rates on small loans from commercial banks to individuals may be de-regulated; specifically, there must be total deregulation of interest rates on small loans (up to Rs 2 lakh) from commercial banks directly to individuals."

The proposal will not make any difference.

SHGs are clusters of 10 to 20 women contributing Rs 10 to Rs 20 per head per month (or sometimes every week) to build a corpus which is on-lent to members at around 13 per cent per annum (in some cases the interest rates are higher) to met urgent, daily expenses. Only in the SHG-Banking Linkage programme do the banks offer loans at around 13 per cent against the amount collected and deposited by the SHG.

This writer, who has met a few SHGs in the western region, has been shown the books of accounts scrupulously maintained by them and most of them are not in a hurry to take bank loans.

As the interest rates are lower than the 3-5 per cent per month charged by the village moneylender, SHGs are not bothered about a de-regulated interest rate scenario.

Banks do not want to bring down lending rates, particularly for farm and off-farm activities, and the Mor group is an exemplar of that attitude.

The group on regulatory issues by Mr N. Kanthakumar believes, "SHGs may not lend outside the Group; SHGs may decide on some cap on borrowings per member; passbooks may be issued to each SHG member."

Why is the Kanthakumar group worried about details when the SHGs have sufficient commonsense to take financial risks? They are aware defaults will only hurt them.

Most SHGs provide individual passbooks; or at least the SHGs which this writer has seen had individual pass books.

It may be far better if RBI looked into helping SHGs set up micro-enterprises with sufficient marketing outlets. That is their demand and for confirmation one could study the paper on micro-enterprises by the Executive Director of Nabard, Dr K.G. Karmakar.

The RBI has placed the group reports on the Web site for public comments.

Women operating SHGs are not literate enough nor have the facilities to hook on to the RBI Web site. It's their view which matters and till that flows in, the RBI should not interfere with SHGs

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