Money & Banking

Banks draft plans for loan recovery from self-help groups in AP

G Naga Sridhar Hyderabad | Updated on January 06, 2011 Published on January 06, 2011

Worried over mounting dues of loans from self-help groups (SHGs) in Andhra Pradesh, public sector banks have lined up a slew of measures for recovery.

According to data with the State Level Bankers' Committee (SLBC), the outstanding loans from about 10 lakh SHG members is around Rs 2,098 crore as on October 31, 2010.

The SLBC has directed all branch managers to participate in the Community-Based Recovery Mechanism (CRBM) meetings in addition to utilising the services of ‘Bank Mitras' for recovery of loans.

“The recovery performance under the sector is far from satisfactory despite the fact that banks and Government of Andhra Pradesh are making efforts to improve the recovery rate,'' says the report of SLBC's 172{+n}{+d} meeting held here last week.

Banks were also asked to prepare district-level plans for recovery camps and submit them to various Government agencies such as the Society for Elimination of Rural Poverty (SERP) for their active involvement.

“The District Rural Development Authority (DRDA) should maintain branch-wise list of defaulting SHGs so that an awareness among the SHGs can be expected,'' the report said. Meanwhile, the SERP, a State Government agency, had also stepped in to ensure recovery of SHG loans.


In a circular to projects directors of DRDA issued on December 24, 2010, Mr B. Rajasekhar, Chief Executive Officer of SERP, said the situation ‘calls for urgent action' as bankers were assured about recovery of overdues as per the memorandum of understanding entered into with the banks.

“The recovery as per our web report is only 70 per cent and several banks have been reporting declining trend in recovery and seeking our help to bring it back to 95 per cent,'' Mr Rajasekhar said.

The project directors were also asked to review the SHG-bank linkage programme, overdues position and ascertain reasons for slow grounding of SHG-bank linkage branch-wise.

Once a flagship programme in Andhra Pradesh, SHGs are under a cloud now with alleged harassment from microfinance institutions and reported difficulties in accessing banks loans, and old loans were largely unpaid.

As on October 31, 2010, the dues are Rs 2,098 crore, constituting 16.42 per cent of outstanding loans. This was at one point of time as low as 5 per cent.

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Published on January 06, 2011
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