Home Banking Self Help Group Credit Flow Lackluster

Self Help Group Credit Flow Lackluster

Bhubaneswar: While the State Government is attaching top priority to its flagship program—Mission Shakti and also taking all possible measures to ensure sufficient credit flow for the Self Help Groups (SHGs), the achievement of Banks in this regard is lackluster.

In fact the banks in the states like Kerala are providing loan to the tune of Rs 4 lakh per SHG, here in Odisha, over the last 3 years, the average ticket size of SHG loans has stood at Rs 1.73 lakhs.

Under the 5T mandate of Mission Shakti, the State Government has set an ambitious target to increase the loan size to Rs 4 lakh per SHG by the Financial Year—2022-23. In this pace, the State is likely achieve the goal, the way banks are responding .  

Institutional finance to women SHGs plays a vital role in livelihood promotion entrepreneurship among women SHG members. This facilitates the building of financial capabilities and self-confidence of women. Therefore, the Banks must expedite their credit flow for the Mission Shakti groups, an official said.

The Commercial Banks functioning in Odisha have been urged to fix the minimum loan size of Rs 2 lakh during the current financial year. All banks are instructed to issue suitable instructions to their field functionaries for adhering the same, the official said.

Under Mission Shakti loan – State Interest Subvention Scheme, bank loan upto Rs 3 lakh being provided to women SHGs at 0 per cent annual rate of interest on prompt and regular repayment.

The interest subvention amount being provided by the Government is acting as a catalyst for SHGs towards taking up new challenges for setting up or scaling up their enterprises leading to strengthening of local economy, contributing more to state GDP and generating more employment opportunities.

Under the scheme, the State had targeted to provide interest subvention to the tune of Rs 150 crore to the Women SHGs through Banks during the financial year 2020-21. But, a sum of Rs125 crore (83.33 percent) has been disbursed to different banks under the Interest Subvention Scheme. Ironically, Banks namely Punjab & Sind Bank and HDFC bank have not furnished any interest subvention claims during the last financial year.

In this regard, the Banks have been directed to come up with a mechanism to see that all interest subvention claims get credited to the SB account of SHGs without delay.

Considering, the growth in credit linkage and repayment of loan by SHG, the current year (2021-22) annual target for Mission Shakti Loan – State Interest Subvention has been fixed to Rs 200 crore

Only 582 Women SHG members have been identified and engaged as Business Correspondents under Yes Bank and ICICI Bank platforms while other banks are asked to explore the possibility, official sources said.

During the last financial year, credit flow was provided to 2,41,339 SHGs against the annual physical target of 2,54,250, which is 95 percent achievement. However, financial achievement of the target comes to 129 percent with loan amounting to Rs 4,190.44 crore. 

To increase quantum of the formal credit to SHGs for undertaking different livelihood and entrepreneurial activities, the financial target for the current financial year has been fixed to Rs 6002.52 crore covering 2,80,150 SHGs, which is 185 percent (financial) & 110 percent (physical) of the last year target.

To integrate online digital solutions to boost the Mission Shakti Loan implementation process, a state-of-the-art Management Information System (MIS) is being developed by Mission Shakti in collaboration with Tata Consultancy Services (TCS).

This portal is going to facilitate & monitor online & offline sponsoring and sanction & repayment of loans & NPA position with respect to SHG loans in the state.

However, Banks including Indian Bank, Central Bank of India and Odisha State Cooperative Bank have yet to sign MoU with the Mission Shakti for dedicated SHG MIS Portal.  These 3 banks are asked to sign the MoU with Mission Shakti as soon as possible, the source said.