Home Finance State Presses For More SHG Credit

State Presses For More SHG Credit

Bhubaneswar: Odisha Government has directed the banks in the State to provide more than Rs.6000 crore credit linkage to the self-help groups (SHGs),while the bankers are going slow in this regard as a result of which achieving the stipulated target is unlikely.

Principal Secretary Finance Vishal Dev has directed the banks to improve performance towards achieving the annual target of credit linkage for SHGs, official sources said on Monday.

Under the 5T mandate, the Department of Mission Shakti (DoMS) had set a target to increase the average loan size to Rs.4 Lakh per SHG by 2022-23 and provide more than Rs.6000 crore to SHGs in 2021-22.

Similarly the average loan size for the 2021-22 financial year comes to Rs.2.05 lakh per SHG, said the officials.

Accordingly, the annual credit linkage target for SHGs during 2021-22 fiscal was set at Rs.6002.52 crore by covering 2,80,150 SHGs.

However, by August 31, 2021, only 64,548 SHGs have been credit linked with an amount of Rs.1321.09 crore.

This accounts for achievement of physical target to the extent 23 per cent and financial target of 22 per cent of the financial year.

With this pace, it will not be possible for the banks to achieve credit linkage target, said senior officials.

They said that at least 40 per cent of the annual target is to be achieved by end of second quarter.

State Government has been asking both public and private sector banks to provide credit linkage to the SHGs and accordingly this fiscal higher target was set to help strengthening these organizations financially sustainable.

The State Level Bankers’ Committee (SLBC) in its recent meeting had discussed the issue at length, where Dev had asked to improve performance towards achieving annual target.

The sources said that more than 45,650 applications are pending at the bank branch level for sanctioning of the Credit Linkage to the SHGs.

The banks have been directed to issue suitable instructions for expediting credit linkage and these financial institutions have been advised to coordinate of officials at district and Block level for this purpose, the officials said.

The banks have been directed to act upon the pending loan applications at the earliest and to ensure that in no case these loan applications requiring immediate action shall not be held on for more than 15 days.

Sources said that loan applications are pending for months together in the banks for which Credit Linkage target is not achieved.

Considering the growth in Credit Linkage and repayment of loan by SHGs, the State Government has set Rs.200 crore for state interest subvention.

Claims amounting Rs.24.40 crore has already been settled by the Department of Mission Shakti. Several banks have not furnished any interest subvention claims over last financial years and the banks are directed to submit unsettled claims for last financial year up to March 31, 2021.

Banks are needed to come up with a mechanism to ensure that all interest subvention claims get credited to the Savings Bank Account of SHGs without delay, said the official sources.