Women Self Help Groups to get low interest loans

Low interest loans will be provided to over 25 lakh Women Self Help Groups across the country under a central programme launched to wipe out absolute poverty from the villages through women empowerment.

Pursuant to the announcement made by Finance Minister P Chidambaram in the 2012-13 budget, the Union Cabinet, which met last week, has approved the provision of interest subvention to Women Self Help Groups, operating under National Rural Livelihood Mission (NRLM), enabling them to avail loans up to Rs 3 lakh at an interest rate of 7 per cent per annum.

Giving the details today, Rural Development Minister Jairam Ramesh said the initiative, in the first phase, would focus on 150 backward districts, including the 82 Integrated Action Plan districts, affected by Naxal menace.

"Today they are getting loans at 11.5 to 14 per cent rate of interest. In 150 districts, all women SHGs which are now getting bank loans at 11.5 to 14 per cent rate of interest will now get it at 7 per cent rate of interest," he said.

The Women SHGs that repay loans in time will get additional three per cent subvention, reducing the effective rate to four per cent, the Minister said.

In the 150 districts, Central government will bear the entire cost of the interest subvention from the market rate to seven percent.

In 392 districts, a majority in north India, women SHGs will get loans at seven per cent rate of interest.

"Rural Development Ministry will bear its 75 per cent cost and states will bear 25 per cent. The cost involved is Rs 560 crore," he said.

Dealing with 81 districts in four South Indian states --Andhra Pradesh, Tamil Nadu, Karnataka and Kerala-- separately, Ramesh said, "here also, Central government will bear 75 per cent cost and state governments will bear 25 per cent."

He said a major chunk of bank lending for women SHGs goes to these four south Indian states.

An amount of Rs 1,650 crore will have to be spent to implement the Cabinet decision on NRLM that covers 25 lakh women selfhelp groups in which three crore women are members.

Out of this, Rs 1,400 crore will be borne by the Central Government and Rs 250 crore will be borne by the state Governments, Ramesh said.

The Cabinet also decided to do away with the BPL criteria in implementing the scheme. Under the existing framework of implementation of NRLM, only rural households included in the official BPL list could be targeted under the programme.

This list was prepared in 2002, has not been updated and has many defects.

"BPL will not be a criteria for identifying women to be made members of Selfhelp groups. The target groups under NRLM will be determined by a well defined, transparent and equitable process of Participatory Identification of Poor (PIP), at the level of the community.


It will be done througha process of participatory identification of the poor. That will be done by the Gram Sabha and the Gram Panchayat," the Minister said.

The PIP process will also have a set of exclusion criteria, automatic inclusion criteria and a set of deprivation indicators for enabling poverty ranking in a participatory manner.

This delinks NRLM target group from the BPL list.

The Cabinet also approved the setting up an "autonomous, adequately staffed, professionally managed and empowered agency at the national level to implement the NRLM, called the National Rural Livelihoods Promotion Society (NRLPS) under the Societies Registration Act.

The NRLPS will act as the technical support unit of NRLM.

NRLM, called as Aajeevika, was launched by the Ministry in June 2011.

NRLM has set out with an agenda to cover seven Crore BPL households, across 600 districts, 6000 blocks, 2.5 lakh Gram Panchayats and six lakh villages in the country through self-managed SHGs and federated institutions and support them for livelihoods collectives in a period of 8-10 years.

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