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The public sector banks (PSBs) in Andhra Pradesh have failed to provide much relief to people in rural areas who have been hit by the crisis in the microfinance industry.
As per the data of the State Level Banking Committee (SLBC), PSBs were far from achieving lending targets of bank linkage schemes, especially to self-help groups (SHGs).
According to Mr R Ramachandran, Chairman and Managing Director of Andhra Bank, and President of SLBC, AP, banks could only disburse Rs 6,791 crore to about 4.60 lakh SHGs for 2010-11 against the target of Rs 8,636 crore.
A senior official of the Department of Rural Development in the AP Government said this was ‘very disappointing' as the Government had actually wanted banks to try to lend much above the target of Rs 8,636 crore.
This was excluding the target of Rs 4,078 crore under community managed sustainable agriculture.
The Government was hoping to fill the credit void created by tough Microfinance Regulation Act in force from October 2010 by increased bank-linkage.
“Not completion of even 100 per cent target would go against the very spirit of providing relief from MFIs,” he said.
POOR RECOVERIES
When contacted, a managing director of a public sector bank said as SHGs have a ‘large amount as outstanding' it was very difficult to step up lending.
“In fact, we have been asking the State Government for their support in recovery of old loans,” he said.
The outstanding loans under the SHG-bank linkage programme in both rural and urban areas had gone up from Rs 9,837 crore in March 2009 to Rs 12,948 crore in January 2011.
Of the over 14 lakh accounts, nearly 2.50 lakh accounts show over dues with a liability of Rs 2,225 crore. The actual over due position is Rs 586 crore.
“In case the recovery is not effected immediately, majority of these are likely to slip to the non-performing assets category,” says SLBC.
The disbursement of fresh loans and collection of old loan dues had almost come to a halt in the State, which is the largest market for MFIs in the country.
Since then, the Government has been asking the banks to come forward to proactively lend to SHGs.
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