micro finance study report

8/7/2019 Micro Finance Study Report

1/44

INVESTMENT SPECIFIC STUDY FOR SHG BANK LINKAGE SECTOR INVISAKHAPATNAM, ANANTAPUR AND MAHABUBNAGAR DISTRICTS.

CHAPTER - I

INTRODUCTION

ORIGIN OF SHG BANK LINKAGE PROGRAMME

A series of research studies conducted by NABARD during early eighties showed

that despite having a wide network of rural bank branches a large number of the

poor continued to remain outside the fold of formal banking system. The studies

showed that the banking systems and procedures, deposits and loan products

were not well suited to meet the most immediate needs of the poor.

The poor people need saving products to save their small amount in a safe

place. The credit needs of the rural poor are characterised by the absence of

any clear distinction between production and consumption purposes but have a

strong bearing on productivity. The needs are small but often arise at

unpredictable times and are usually of an emergent nature. They need money to

deal with personal emergencies such as illness, accidents and "natural disasters"

like floods, cyclones, fires etc. They also need money for taking up income

generating activities or expand their existing business to enhance their income.

Meeting these credit needs quickly as and when they arise is crucial to reduce

their dependence on informal credit agencies.

Banks find it difficult to meet the savings and credit needs of the poor because of

high transaction cost due to large number of small accounts and shortage of staff

in rural branches. Keeping in view the above aspects, the search for alternative

policies, systems and procedures, savings and loan products began to meet the

requirements of the poor rural households. NABARD initiated a few action

research projects on SHGs as a channel for delivery of SHG bank linkage in the

eighties. In the year 1987, NABARD provided grant support of Rs.10.00 lakh to


2/44

Mysore Resettlement and Development Agency (MYRADA) to promote Credit

Management Groups, to experiment with the "group-approach" for meeting the

financial needs of the rural poor.

The advantages of group approach are that the tasks are best carried out bysmall groups as they allow active participation and contribution of the members

as the interactions take place face to face. According to group behavior theory,

people come together and function as a group if they are organised for a

purpose, which furthers their common interest.

Pilot project on SHG Bank Linkage

Based on the positive and encouraging findings of the above studies / research

projects, NABARD, in consultation with Reserve Bank of India, initiated the PilotProject in 1992 for linking of 500 SHGs with banks with the following objectives :

Evolving supplementary credit strategies for meeting credit needs of the

poor by combining flexibility, sensitivity and responsiveness of the informal

credit system with the strengths of technical, administrative capabilities

and financial resources of the formal credit institutions.

Building mutual trust and confidence between bankers and rural poor

Encouraging banking activity, viz. thrift as well as credit, in a segment of

the population that the formal financial institutions usually find difficult to

cover.

From a modest beginning of financing 255 SHGs during 1992-93, the programme

reached financing of 620 SHGs in 1993-94 and 2122 SHGs during 1994-95.

Reserve Bank of India constituted "Working Group on Non Governmental

Organisations and Self Help Groups" on 30 November 1994 to review the

progress and performance of SHGs as conduit of the rural credit delivery system

under the pilot phase, under the Chairmanship of Shri S.K.Kalia, MD, NABARD.

Based on the recommendations of the Working Group, SHG Bank Linkage

Programme was made a normal business activity of the banks in the year 1996

by Reserve Bank of India.


3/44

The SHG Bank Linkage Programme - Growth Trajectory

The SHG Bank Linkage grew rapidly from 1999-2000 and registered remarkable

progress by 2008-09 as under :

(Rs.Crores)

Year All India Level Andhra Pradesh Share of AndhraPradesh (%)

No.ofSHGs

credit

linked

CreditFlow

No.ofSHGs

credit

linked

CreditFlow

No.ofSHGs

credit

linked

CreditFlow

2001-02 239,066 545.46 117,352 267.09 49.09 48.972002-03 255,882 1022.34 165,429 454.13 64.65 44.42

2003-04 361,731 1855.31 231,336 752.99 63.95 40.59

2004-05 797,457 2924.20 261,254 1017.71 32.76 34.80

2005-06 964,611 4499.01 294,341 1599.43 30.51 35.55

2006-07 1,105,749 6570.39 359,276 2775.45 32.49 42.24

2007-08 1,227,770 8849.26 415,206 5573.34 33.82 62.98

2008-09 1,690,761 12689.22 500,536 6767.40 29.60 53.33

Source : Banking with poor published by NABARD, AP RO

Against the above background and keeping in view the emerging concerns about

sustainability of the programme it has been decided to take up a specific study

on micro finance sector in the State.

STATE GOVERNMENT & SERP INITIATIVES

In addition to formation, linkage and capacity building of SHGs, supporting

formation of Vos, MS, Zss The state government had taken some other

initiatives for the benefit of SHG members.

ABHAYA HASTAM Some members paid premium by withdrawing from their

savings and repaid with interest, some members withdrawn from savings,

some members withdrawn from savings and increased their monthly savings,

some others paid directly from other sources.


4/44

Few members of a group and / or few groups not shown interest at all to this

abhaya hastam scheme as they are younger and the pension will starts at the

age of 61. Some members are not believed the scheme / perceived the

scheme will not start. Some members not joined as they have not received

the Policy for Aamadmi Bhima Yojana / Janasree Bhima Yojana due to

various reasons. Some were not joined, as the few area co-ordinators of

SERP insisted to join all the group members or not to join at all and not given

chance to join few members. Some were not joined due to very little time

given by SERP to join the scheme and members are unable to take decision

as they it will impact longer period.

Bank Mitra/ Case managers Mandal samakhya appoints some of the SHG

members as case managers/ bank mitras and pays Rs.600/- to Rs.1200/- per

month based on number of SHGs they serve. For this service each SHG has

to pay Rs.100/- per annum to VO and VO in turn passes the same to MS. The

case manager will assist in writing vouchers/ deposit slips, filling up of

applications for loans, assisting in calculation of interest subsidy etc.

Community Based Recovery Mechanism (CBRM)

for 100% Recovery of Loans Under SHG-Bank Linkage

Background:

Andhra Pradesh is a pioneer state in mobilizing and organizing rural women

belonging to the poorer sections of the society as an entry point for enabling the

poorer families to overcome the poverty. The Self-Help Group, which is a building

block in the network of the women, has been able to access to loans from the

respective commercial and rural banks. During the financial year of 2004-05, the

loan component under SHG-Bank linkage was Rs.1000 crores and it is targeted

during the current year of Rs.2000 crores

The funds accessed by the SHGs of women are being utilized by themselves for

Income Generation activities and also for meeting Social Needs like education


5/44

and health. The phenomenal growth both in number of SHGs and in quantum of

finance accessed by these SHGs requires a special focus to be given on

recovery of loans under this programme. There is no need to emphasize that

nothing short of 100% timely payment of installments only will strengthen and

sustain this movement, which will only be ensured through community driven

recovery mechanism. No coercive steps will have the strength equivalent to

community driven peer pressure in getting the loans recovered in time. The

timely repayment of loans should become part of the culture of these institutions

of the poor and it is only possible through the community-based recovery

mechanism.

Objectives:

* To ensure 100% recovery by the community itself

* No coercive steps to be adopted either by the institutions of the poor or by the

external agencies outside the SHG network

* Peer pressure is the right strategy, which enables 100% repayment in time

* Enabling the Branch Manager to have close interaction with the community

within the service area both in recovery of loans and in addressing the needs of

finance of the SHGs as well.

* Enabling a system to be built on permanent basis for monitoring the recovery of

loans under SHG-Bank Linkage and/or VO-Bank Linkage


6/44

CHAPTER - IIObjectives and Methodology

1, Objectives

2.1. The broad objectives of the ISS Study were as under :

To assess the actual cost of investment, the unit cost adopted and the

adequacy of the loan provided by banks.

To assess the availability and adequacy of backward and forward linkage.

To estimate the income generation from the investment

To study the repayment performance

To identify the constraints and suggest solutions for the same.

2.2. Methodology

(i) The section of Districts :

2.2. The selection of districts for the present study was based on the aggregate

disbursement of NABARD refinance under SHG bank linkage in all the districts

during the previous 3 years (2006-07 to 2008-09). Accordingly, Visakhapatnam,

Anantapur and Mahabubnagar districts representing Coastal, Rayalaseema andTelangana regions of the State were selected for the study.

(ii) Selection of Banks/ Branches :

2.3. The selection of banks was based on the aggregate amount of NABARD's

refinance drawn during 2006-07 to 2008-09. Accordingly, Andhra Bank, APGVB,

APGB, Indian Overseas Bank and DCCBs of Visakhapatnam and Anantapur

districts were considered for the study. Bank branches were selected based on

credit extended to the sector during the same period. A total of 3 branches ofAndhra Bank, 2 branches of Indian Overseas Bank, 3 branches of Andhra

Pradesh Gramin Vikas Bank, 1 branch of APGB, 1 branch of Visakhapatnam

DCCB and 1 branch of Anantapur DCCB were selected on the basis of the credit

flow. The branches selected for the study are indicated in Table.


7/44

Banks and Branches selected for the study

Name of theDistrict

Name of theBank

Name of theBranch

No.of SHGs visited

Visakhapatnam Andhra Bank Yellamanchili 5

IndianOverseas Bank Rampuram 4

AndhraPradeshGrameenaVikas Bank

Sirasapalli 4

DCCB Anakapalle 5

Anantapur Andhra Bank AnantapuramRural

5

IndianOverseas Bank

Anantapuram 5

' Andhra PragatiGrameenaBank

Garladinne 5

DCCB Gooty 4

Mahabubnagar Andhra Bank Mahabubnagar 6

AndhraPradeshGrameenaVikas Bank

Kottur 4

AndhraPradesh

GrameenaVikas Bank

Mahabubnagar 3

TOTAL 50

2.3. Collection of Data

Data / information was collected from both primary and secondary sources.

Primary data collection done by visiting with SHG Groups and interviewing the

members of Self Help Groups. Information was also collected from the records

maintained by the selected bank branches. Discussions were also held with

officials of selected bank branches, LDM of Mahabubnagar, DDMs of

Visakhapatnam, Anantapur and Mahabubnagar districts. Secondary data was

sourced from District Credit Plans, PLPs, State Focus Papers, data of SERP.

2.4 Analysis of Data


8/44

Data/information so collected was subjected to tabular anaysis to obtain the

basic principles of homogeneity, regular meetings, savings, internal lending and

book keeping and also the disbursement of loans to SHGs and their adequacy.


9/44

CHAPTER - IIIStatus of SHG bank linkage programme

Status of SHG bank linkage programme in the State

Andhra Pradesh has been the front runner in SBLP in the country and has even

overtaken the Bangladesh Grameena Bank in client out reach and loan

outstanding. The growth of the programme in the state over the years is shown

in the Table below :

Growth of SBLP over the years.

Period

No. ofgroups

financed

(Rs.Crore)

Average Pergroup finance

(In Rs.)

1992-93 35 0.09 25085

1993-94 102 0.16 16171

1994-95 105 0.31 29723

1995-96 147 0.44 29932

1996-97 434 1.40 32488

1997-98 1322 3.18 24054

1998-99 6579 12.75 19380

1999-00 29242 54.95 18791

2000-01 84939 143.17 16856

2001-02 117352 267.09 22760

2002-03 165429 454.13 27452

2003-04 231336 752.99 32550

2004-05 261254 1017.71 38955

2005-06 294341 1599.43 54339

2006-07 359276 2775.45 77251

2007-08 415206 5573.34 134230

2008-09 500536 6767.40 135306

Source : Banking with poor published by NABARD, AP RO

The average loan per group consisting of average 10 persons is RS. 1.35 lakh

i.e. 13,500 per member.

Besides SHG BLP, the growth of MFI Sector also has been impressive in the

state. From a small portfolio outsanding of Rs.8.97 billion in 2005, the mFI

segment has grown 13 times in 4 years to end the year 2009 with Rs.117

billion in outstanding loans. The growth rates in four successive years are


10/44

commendable in comparison with any sector of the economy by having poor

women and other weaker sections as predominant clientele.

Andhra Pradesh finds a prominent place in the movement of Self Help Groups

with 9.80 lakh Self Help Groups, covering about 101.52 lakh rural women. It has,in fact, come to be known as the micro finance capital of the country. Society for

Elimination of Rural Poverty (SERP) through Indira Kranti Patham (IKP) project

has focussed on formation of SHGs of the poorest of the poor and BPL families.

However, while forming the SHGs, some non poor members have also become

members of the SHGs. More than one member of a family have also become

members of different SHGs in the same village and some times in the same

SHG. It is estimated that about 50% of the population of the state is either

directly or indirectly impacted by the programme.

SHPI in Andhra Pradesh - 31 March 2009

Particulars Andhra Pradesh

No. % to total

No.of SHGs promoted by

Govt. Agencies 828,028 97.69

Banks 2,381 0.24

NGOs 20,148 2.06

Farmer Clubs 114 0.01

Total 850,671 100.00

Source : NABARD & SERP

Profile of members

The average number of members in SHGs in Andhra Pradesh is 10. The SHG

members mostly come from the disadvantaged sections of the society, viz.

Scheduled Castes (19.40%) , Scheduled Tribes (9.16%) and Backward Classes

(50.83%) and Minorities (16.66%) as given below :

Sl.No.

District No.of SHGMembers

Caste

SC ST BC Minorities

Others

1 All AndhraPradesh

10,152,954 1,969,946 929,770 5,160,488 401,606 1,691,144

2 Anantapur 473,773 67,478 24,594 261,572 30,266 89,863


11/44

3 Mahabubnagar

499,933 91,368 49,416 293,310 25,470 40,369

4 Visakhapatnam

499,912 38,154 90,568 256,855 2,473 111,862

Source : SERP data

Majority of the SHG members are from the Poor (73.33%) and Poorest of the

Poor (19.70%) as given below :

Sl.No.

District No.of SHGMembers

Financial Status

Poorest ofthe Poor

Poor MiddleClass

Others

1 All AndhraPradesh

10,152,954 1,999,951 7,444,687 686,778 21,538

2 Anantapur 473,773 75,106 367,910 30,039 718

3 Mahabubnagar

499,933 126,439 346,207 26,910 377

4 Visakhapatnam

499,912 120,428 343,796 35,037 651

Source : SERP data

Age-wise classification

30.30% of members are in the age group of 18-30 and 32.86% are in the age

group of 31-40 and 7.37% are above 60 years. The details are as under :

Sl.No District No.of SHG

Members

Members Age-wise

18-30 31-40 41-50 51-59 60-65 66 andabove

1 All AndhraPradesh

10,152,954 3,076,576 3,336,234 215,711 918,091 412,277 234,065

2 Anantapur 473,773 126,002 158,613 104,235 45,286 17,218 12,832

3 Mahabubnagar 499,933 142,445 150,807 100,161 46,098 23,415 13,900

4 Visakhapatnam

499,912 162,487 163,873 102,930 43,842 17,162 9,516

Source : SERP data

Resources of SHGs

The resources of the SHGs come from the thrift by the members, bank loan,

interest earned on internal lending, interest subsidy received and revolving fund

assistance provided by the State Government. The average savings of the

majority of the SHG members in the state is in the range of Rs.30 to Rs.50 per


12/44

month. Some of the old groups saves upto Rs.100 per month. The SHGs in the

state mostly follow a monthly savings system.

The savings coupled with the bank finance have been used for internal lending

among the members at an interest rate ranging from 13 to 24% per annum. Theinterest charged by the banks to the SHGs is in the range of 10.5 to 14% per

annum. With effect from 01 July 2004, the SHGs in the state are getting bank

loan at an effective rate of interest of 3% per annum as the State Government is

reimbursing to the SHGs the interest charged by the banks over and above 3%

for prompt repayment. The thrift collections and the interest differential have

helped the SHGs in building a corpus of Rs.4025.55 Crores as at the end of 31

march 2009. The thrift portion (Rs.1962.50 crores) constituted 48.75% of the

corpus.

Own resources of the SHGs as on 31 March 2009 - Andhra Pradesh

Particulars AndhraPradesh

Anantapur Mahabubnagar

Visakhapatnam

Total Savings of theSHGs (Rs.in Crore)

1962.50 89.43 115.11 64.80

Average Savings perSHG (Rupees)

23,070 17,000 30,835 15,835

Total corpus of the

SHGs (Rs.in Crore)

4025.55 449.43 150.00 148.91

Average amount ofCorpus per SHG(Rupees)

47,322 88,000 40,181 36,390

Note : Corpus includes savings of the groups, interest earned by the SHGs on

the internal lending, revolving fund assistance provided by the State

Government, penalties collected etc. (Source : Department of Rural

Development, Government of Andhra Pradesh).

Regional Spread of SHG movement in Andhra Pradesh

Andhra Pradesh has 3 major regions - Telangana comprising of 9 districts,

coastal andhra with 9 districts and Rayalaseema with 4 districts. Coastal Andhra

has maximum number of SHGs, viz. 43% of the SHGs in the State followed by

Telangana and Rayalaseema constituting 38% and 19% respectively. Within


13/44

Andhra Pradesh, 15 districts have more than 30,000 SHGs and the other 7

districts have SHGs in the range of 23,900 to 29,800 per district.

Regional Spread of SHG movement in Andhra Pradesh

S.No.

Region Total no.of SHGs

No.ofmembers

Cumulativenumber ofSHGscreditlinked uptoMarch2009 (Rs.Crores)

CumulativeBank loanupto March2009(Rs.Crores)

1 CoastalAndhra (9districts)

370,104 4,273,707 849,352 9,585.14

% to total 45 46 46 50

2 Rayalaseem (4districts)

159,153 1,934,640 319,903 3,764.89

% to total 19 19 17 19

3 Telangana (9 districts)

321,414 3,973,834 693,051 6,111.69

% to total 38 39 37 31

Total 850,671 10,182,181 1,862,306 19,461.71

Source : NABARD Data

The Coastal Andhra Pradesh has been leading region in SHG movement due to

high level of awareness among people. The region had the advantage of pro

active district administration which adopted innovative modes to increase the

number of SHGs like involving all the line departments in formation of SHGs,

integrating and routing all state government programmes through SHGs, close

monitoring and follow up, providing incentives in the form of deposits to the

banks for providing linkage etc.

Status of Micro finance in study districts

Visakhapatnam, Anantapur and Mahabubnagar districts.

Basic tenets and group dynamics in sample SHGs


14/44

The organisational sustainability of the group depends on the internal dynamics

that is vital for quality and overall growth of the programme. Right from the

beginning NABARD has been laying great emphasis on quality of groups which

depends on the groups adherence to the basic tenets. While the groups may be

economically poor, it is essential that they do not compromise on the basic tenets

which dilutes their functioning over a period of time. Sustaining the interest of

group members in managing the groups with broad based functioning after more

than a decade of existence appears to be challenging.

In the three districts covered by the study the functioning of the groups can

broadly be categorised as satisfactory though there are variations across thegroups. The groups in general conformed to basic tenets covering regular

savings, meetings, internal lendings and prompt repayment which are mostly

related to the financial aspects. However the groups do not score very high on

more qualitative parameters of groups functioning related to member awareness

of groups functioning and their rights and responsibilities,participatory decision

making process, leadership rotation, credit prioritisation, group governance, etc.

though there are a few exceptions.

A) Membership

All the groups were women groups with membership ranging from 10 to 15.

While the old SHGs had 13 to 15 members and others had 10 to 12 members. In

majority of the groups there were no dropouts and the SHPI / SHG members was

conscious not to encourage unmarried women into the groups for obvious

reasons.

Membership pattern as on 31.03.2009

S.No. Particulars Total Groups Total

Membership

Average

membersip

per group

1 All Andhra

Pradesh

850,671 10,182,181


15/44

2 Anantapur 51,205 523,439 10

3 Mahabubnagar 37,331 513,140 14

4 Visakhapatnam 40,921 495,524 12

Source : Banking with poor published by NABARD, AP RO & PLP

B) Meetings of SHGs

It was observed that the meetings are held regularly. Generally, these are held

on monthly intervals though some groups are increasing the frequency to weekly

meetings. One positive feature in conduct of meetings is that they are held in

houses of all members on rotation basis. The groups encourage the respective

member to chair the meeting whenever it is held at her residence. In general

there was no rotation of leadership and the same leader/s was continuing since

formation. The village book keepers in some villages also attend the meetings

and record the proceedings. Thrift and credit activities are generally taken up in

these meetings. Though the meetings are held regularly, the agenda is mostly

restricted to monetary transactions with little discussion on other development

issues concerning the group or the village. In some groups the collection of

savings, credit decision, and repayment are not converged at meeting point and

the practice of members making the payment to the leaders after or before the

meeting was present thus affecting the transparency in operations. The

attendance of members in meetings was generally good with a provision for

penalty for late attendance/absence unless there is a genuine reason. Perusal of

minutes books revealed that the minutes are recorded in a perfunctory manner

covering routine financial matters with little changes and active participation of

members in deliberations does not seem to be happening.

Periodicity of Meetings conducted by studied groups.

district wise breakupPeriodicity of Meeting Anantapur Mahabub Visakha TOTAL


16/44

nagar patnam

Weekly 0 2 1 3

Fortnightly 1 2 2 5

Monthly 18 15 9 42

No meeting from last 5-6

months

0 0 1 1

total 19 19 13 51

C. Thrift and corpus of the groups

Besides meeting, another vital group activity that the members have been regular

in practicing is group savings. All the groups except those that have become

defunct for various reasons have been regular in savings and also increased the

amount over the years. Majority of the groups are nearly ten years old and

initially started with savings of Rs.30 per month and raised to Rs.50 and current

savings are ranging between Rs.80-100 clearly demonstrating the improved

economic status and appreciation of the need for higher savings to strengthen

the corpus. Though the members are provided with individual passbooks which

reflects their savings and loans with the SHG the updation is not regular in some

cases. Inspite of availability of individual pass books some members still are

unaware of their total savings and their corpus (savings+grants+interest

income).

Amount of thrift contributed by SHG members in the studied

groups. .district wise breakup

Thirft permonth(Rupees)

Anantapur Mahabubnagar Visakhapatnam TOTAL

30 1 2 8

50 9 6 32

100 9 5 10

TOTAL 19 13 0 50


17/44

D. Thrift and Internal Lending

The practice of internal lending,another essential element in group functioning, is

generally observed in groups. The groups charge 12%-24% on loans from

savings while the bank loan is lent as per actual rate of interest charged by the

banks. In some of the groups, savings are not internally lent and are kept in the

bank in SB accounts. It is reported that some branch managers (in all the three

districts) do not permit withdrawal of savings as they feel the impounded amount

in SB account is the security for loans. In some groups ( in Mahabubnagar

district) the group corpus after a few years is distributed among members ranging

from 5000 to 10000 per member and corpus is built afresh from incremental

savings. In Anantapur and Mahabubnagar districts some of the branch

managers insist for Fixed Deposits ranging from Rs. 10000 to Rs.40000 while

sanctioning / disbursing SHG loans and also insist for opening of individual

Recurring Deposits and SB accounts. Due to these type of practices by branch

managers, SHG members are unable to utilise the total corpus for their internal

lending. .to indicate the bank andbranch.

E. Book keeping in SHGs

This is an area of real concern. The groups that are more than ten years old

should have established a few internal processes that are vital in their

functioning. Across the three districts it was observed that the maintenance of

records was either not update or the books are not accurate. The SHPI has

placed Village Book Keepers and Mandal Book Keepers exclusively for writing

records during initial period of the groups life and train one of the group members


18/44

to take up the task eventually. But this system was not found to be effective at

the field level. The banks continue to finance the groups overlooking this aspect

as financing of SHGs has occupied a premier status in their loan portfolio and

they are comfortable since the repayment continues to be good. At the same

time poor records maintenance becomes an excuse for an unwilling and

negatively oriented branch staff to refuse loans to the groups. Presently, five

types of books are maintained - Minutes Book, Cash book, Loan Ledger,

General Ledger, Member wise individual passbook. For the long term

sustenance of the programme this is one area that is to be paid immediate

attention by all stakeholders so that groups too realise its importance. While in

the initial stages of the programme low awareness and literacy at the groups

level was accounted for poor maintenance of the books, currently the inertia that

has set in at the groups level appears to be contributing to poor record

maintenance inspite of improved abilities of the group members over the years.

Status of Book keeping by the studied groups are as under :

district wise breakupParticulars No. of GroupsCash book, minutes bookalong with individualspass books updated

9

Cash book, minutes bookupdated

35

Not maintained any typeof books of account

6

TOTAL 50

Micro Enterprise Development Programmes

NABARD is providing training to SHG members through MEDPs which was

introduced in 2006-07 (on 02 March 2006)


19/44

Objective of MEDPs :Enhance capacities of matured SHG members through

appropriate skill upgradation / development in existing or new livelihood activities

in FS/ NFS activities

NABARD assistance: Max of Rs. 30,000/- per programme of 13 days durationcovering approx 30 SHG members (Maximum amount revised to Rs.39,000).

The duration of the training programme will be 3 to 13 days depending on the

activity and it should be on-site or field.

MEDPs conducted through any agency which is a legal entity and is involved in

micro finance/ enterprise development or has reasonable knowledge and

understanding of the subject. MEDPs are , therefore conducted through NGOs,

Bank promoted training institutes like RUDSETIs, registered federations of

SHGs, etc.

So far, NABARD, Andhra Pradesh Regional Office had conducted MEDPs as

under:

Particulars 2006-07 2007-08 2008-09 2009-10

No.of MEDPs conducted 7 21 94 180

No.of participants trained 197 531 2,330 4,095

Amount spent (Rs.lakhs) 1.31 3.98 18.08 32.53

MEDPs conducted in studied districts during the year 2008-09 & 2009-10

(Rs.lakhs)

Sl.No.

Name of theDistrict

2008-09 2009-10

No,of

Prog.

Participants Amt. No,of

Prog.

Participants Amt.

1 Anantapur 8 240 1.88 9 270 2.56

2 Mahabubnagar 4 115 0.49 3 75 0.68

3 Visakhapatnam 28 545 5.25 35 700 5.19

Various MEDPs were sanctioned / conducted in farm as well non-farm sector as

under :


20/44

Farm Sector activities : Dairy, Cattle and buffalo rearing, vermicompost making/

organic cultivation, vermicomposting, post harvest fish processing and scientific

drying of fish, processing and value addition of fish, bee keeping /processing/

wax making etc.

Non-Farm Sector activities : Lantern basket weaving, paper products, tamarind

cake making, muggam embroidery, fabric/ glass/ pot painting, petty coat and

saree fall making, agarbatti making, pickle making, papad making, coir products,

food products, zardosi, bangle designing, soft toys making, beauty care, saree

rolling, adda leaf making, bamboo articles, candle making, bag making with

embroidery, hand and machine embroidery, repairs of sewing machines, Jute

bags, fashion designing, tailoring and dress making, detergent/ soap making/

phenyle making, mirror and applique work, leather and rexine products etc.


21/44

CHAPTER - IVGround Level Credit Flow under SHG BLP and NABARD Refinance

1. Ground Level Credit Flow under SHG BLP in Visakhapatnam, Anantapur and

Mahabubnagar districts.

(i) Total GLC flow under SHG BLP

The GLC flow for the last three years i.e. 2006-07, 2007-08 and 2008-09 is

mentioned in Table. As can be observed from the table that the GLC under SHG

BLP in all the three districts has shown continuous increase. There was a steady

increase in the credit flow under SHG bank linkage programme.

GLC Flow under SHG BLP during 2006-09 in the districts studied(Rs.lakhs)

Name of the

District

2006-07 2007-08 2008-09

Amount % of increase to

last year


last year


last year

Anantapur 9701 67.39 32541 235.43 32830 0.89

Mahabubnagar 7259 61.68 17146 136.20 22370 30.47

Visakhapatna

m

11749 12.09 26087 122.04 33005 26.52


Agency-wise GLC flow under SHG BLP during 2006-09 in the districts studied

(Rs.lakhs)

Name of the District Type of Agency 2006-07 2007-08 2008-09

Amount Amount Amount

Anantapur Commercial Banks 4682 17345 21108

RRB 4815 14638 11083

Co-operatives 204 558 639

Mahabubnagar Commercial Banks 4307 10881 15914

RRB 2952 6257 6456

Co-operatives 0 9 0


22/44

Visakhapatnam Commercial Banks 7089 17253 24404

RRB 4439 8605 8388

Co-operatives 221 229 213


It is observed from the above data, the share of Commercial Banks and RRBs inSHG BLP are increasing faster comparative to Cooperative Banks.

Disbursement of NABARD Refinance under SHG bank linkage programme

The Share of NABARD refinance under SHG bank linkage which was Rs. 967.02

crores for the year 2007-08, increased to Rs.1685.23 Crores and Rs.2318.30

crores respectively during 2008-09 and 2009-10. The refinance under this

sector is increasing rapidly and contributing significantly to achievement of

Investment Credit refinance by RO.

NABARD refinance in Andhra Pradesh vis-a-vis share of SHG bank linkage

(Rs.Crores)

Year TotalRefinance

Refinance to SHGbank linkage

% of Share

2007-08 1412.13 967.02 68.48

2008-09 1787.54 1685.23 94.28

2009-10 3442.80 2318.30 67.34


NABARD refinance in SHG Bank Linkage Programme

(Rs.Crores)

Year 2007-08 2008-09 2009-10

All AndhraPradesh

967.02 1685.23 2318.30

Anantapur 105.98 128.14 100.77

Mahabubnagar 50.91 85.63 77.20

Visakhapatnam 61.35 84.39 49.00


Agency-wise refinance under SHG bank linkage are as under :

(Rs.crores)

Year Refinance CBs RRBs DCCBs

2007-08 967.02 21.46 923.16 22.40


23/44

2008-09 1685.23 804.18 806.87 74.18

2009-10 2318.30 1315.82 953.87 48.61


Refinance under SHG BLP was increased during the last 3 years in case of

Commercial Banks where as RRBs it is almost stagnant. There is need for

active involvement of DCCBs in extending credit to SHGs which will enhance the

profitability levels of branches as happened in case of RRBs.


24/44

CHAPTER - VAppraisal, Sanction and Disbursement of SHG Loans

Appraisal Norms

NABARD issued initial guidelines under which banks can provide loans to

SHGs in the ratio of upto 1:4 to their savings/ corpus. Later, NABARD revised its

guidelines and enhanced ratio and banks can provide loans upto 10 times of their

corpus.

Considering the sharp growth of the programme in the state and also increasing

credit needs of the groups, the bankers are appraising SHG loans based on

guidelines formulated by SLBC in 2007 as under :

S.No. Limit Eligibility1 SHGs accessing FIRST DOSE of Finance

- -> SHGs who are linked to banks and having regular savings at least forSIX MONTHS are eligible for first dose of finance.

(a) Regular loan Regular Loan eligibility is 4 times of savings/ corpus (or) Rs.50,000(Fifty thousand) which ever ishigher.

(b) Additional Loan for Debt Swapping(it is one time measure applicableonly in selected villages - i.e. Two

villages per branch)

50% of eligible loan amount ascalculated above (or) to the extentof debt (proof of debt is to be

produced) which ever is lower, forrepayment of loan amounts of SHGmembers taken from the non-institutional agencies (i.e. Forrepayment of loans taken by themembers of SHGs from privatemoneylenders) as additional termloan repayment in three to fiveyears in monthly instalments withgestation period of 6 months. Thislimit is not linked with corpus.

(c) Additional term loan for house - tomeet the margin requirement inweaker section housing schemes

Additional loan of Rs.20000/- permember of SHG subject tomaximum of Rs.1.00 lakh per SHG,to meet the margin requirement ofhousing schemes either inINDIRAMMA (or) NON-INDIRAMMA villages i.e. Themembers who have been


25/44

sanctioned houses under weakersection housing schemes. Theloan is repayable in 60 monthlyinstalments.

(d) Aggregate limits of A + B + C Aggregate of three limits i.e. The

regular loan, additional loan forrepayment of loans with privatemoney lenders and additional termloan for housing is subject tomaximum ofRs.1.75 lakhs perSHG

II SHGs accessing SECOND DOSE of Finance

--> SHGs who have taken loan once and repaid promptly are eligible forsecond dose of finance--> There should be minimum of12 MONTHS from the date of availmentof 1st dose of loan to avail II dose of loan.

(a) Regular loan Regular loan eligibility of 10 timesof Savings/ Corpus (or) Rs.1.00lakh whichever is higher

(b) Additional Loan for Debt Swapping(it is one time measure applicableonly in selected villages - i.e. Twovillages per branch)

Same as First dose


Same as First dose

(d) Aggregate limits of A + B + C Aggregate of three limits i.e. The

regular loan, additional loan forrepayment of loans with privatemoney lenders and additional termloan for housing is subject tomaximum ofRs.2.50 lakhs perSHG

III SHGs accessing THIRD DOSE of Finance onwards (Financing based onMicro Credit Plan - MCP)

--> SHGs who have taken loans twice and repaid promptly are eligible

for third dose of finance and subsequent doses of finance.--> There should be MINIMUM OF 18 MONTHS from the date ofavailment of II dose of finance to avail 3rd dose of finance and likewisesubsequent doses also.

(a) Regular loan Regular loan limit as per eligibilityi.e. Eligibility as perMICROCREDIT PLAN - MCP {MCP


26/44

includes Investment CreditNeeds and Social needs(maximum 10% of investmentneeds)}

(b) Additional Loan for Debt Swapping(it is one time measure applicableonly in selected villages - i.e. Twovillages per branch)

Subject to maximum of 40 % ofMCP (or) to the extent of debtwhich ever is lower.


Same as First dose

(d) Aggregate limits of A + B + C Aggregate of three limits i.e. Theregular loan, additional loan forrepayment of loans with privatemoney lenders and additional term

loan for housing is subject tomaximum ofRs.5.00 lakhs perSHG

Loan Sanctioning Powers

The Sanctioning Powers of term loans delegated to the branch managers are

given below. The Branch Managers of the Andhra Bank and APGVB were

delegated adequate powers for sanctioning loan applications under SHG.

However, the sanctioning powers of Branch Managers of DCCBs were

insufficient in case of Visakhapatnam DCCB and there are no sanctioning

powers to Branch managers of Anantapur DCCB under SHG portfolio.

Delegation of Powers to Branch Manager

ANDHRA BANK

S.No. Branch Manager Loan Amount

1 Scale - I & II Upto 2.00 lakhs

2 Scale - III & IV Upto 3.00 lakhs

3 Scale - V Upto 5.00 lakhs

APGVB


1 Scale - I Upto 1.00 lakhs

2 Scale - II Upto 5.00 lakhs

DCCB, VISAKHAPATNAM



27/44

1 Any Scale Upto 1.00 lakhs

2 Head Office Upto 5.00 lakhs

DCCB, Anantapur

S.No. Branch Manager Loanf Amount

1 Any Scale No sanction Powers2 Head Office Upto 5.00 lakhs

Mode of Loan disbursement

Generally, the loans sanctioned to SHGs were credited to SB accounts after

sanctioning the same. The disbursement is made through withdrawals by the

authorised persons of SHGs.

In case of SHGs in Nizalapur Village of Addakula mandal in Mahabubnagar

district, the loan proceeds are credited into the Village Organisation's account asper SHG's instructions. Then, the VO in consultation with concerned SHG

members sanctions loans to individual members at 15% where as APGVB

charges only 14% from SHGs. It is also observed that, the VO may or may not

issue entire loan taken by the SHG, to that particular SHG as an assessment is

made by VO based on needs. In some cases, it has given lesser loan while in

other cases it has given higher loan depending upon the repayment capacity of

the particular member based on the recommendation of the concerned SHG.

The interest subsidy on prompt repayment, received from Government of Andhra

Pradesh is distributed among all the SHGs under that particular VO equally

irrespective of the loans taken by each SHG. The VO also distributes the profits

annually to each SHG equally in the form of dividends.

All the SHGs recover the monthly instalments from members and make

payments to VO and in turn the VO makes payment to the Bank. In case, the

SHG is unable to make payment to VO, then also the VO makes payment to

Bank and recollects from the SHG in due course.

Margin and Security Norms\ for lending to SHGs

The SHGs would not be in a position to offer any collateral security other than the

group savings. As per operational guidelines of RBI / NABARD, SHGs are


28/44

sanctioned savings linked loans by banks. Experience has shown that group

dynamics and peer pressure brought in excellent recovery from members of the

SHGs. Banks have been given flexibility in respect of margin, security norms.

etc.

Rate of Interest

The rate of interest charged by RRBs (11 to 14% ) and DCCB (14%) was higher

as compared to Commercial Banks (10 to 13%). As learnt during the study, the

Rate of Interest in RRBs/ DCCBs is higher than Commercial Banks due to high

cost of funds raised by them.

Repayment Schedule

Eventhough the repayment fixed by the banks is 18 to 60 months depending

upon the amount of loan availed by SHGs, 90-95% of SHGs are repaying the

loans in minimum period only, i.e., loans upto Rs. 50,000/- were repaying in 18

months, loans above 50,000 to 2,00,000 were repaid in 2 years, so that they can

get higher quantum of loans.

DIST WISE BANK WISE DATA ON % OF

RECOVERY OF LOAN

Grace Period

Even though the 3rd dosage onwards SHG loans were issued for income

generating activities based on MCP, no grace period was allowed for repayment

and the repayment period starts from succeeding month.

Subsidy Norms

Revolving fund assistance: For ensuring financial viability of the SHGs, the

state government had provided Revolving Fund Assistance upto Rs.25,000/- to

the SHGs consisting of Rs.10000 as subsidy and Rs.15,000 as loan. SHGs


29/44

which have completed six months of thrift and proper group dynamism are

eligible to get revolving fund assistance. After introduction of Pavalavaddi

Scheme in 2004, the assistance under this scheme was withdrawn.

Pavala Vaddi Scheme

Government of Andhra Pradesh has introduced an interest subsidy scheme from 1 July

2004 for prompt repayment of bank loans by the members of SHGs. The salient features

of the scheme are:

The scheme shall be applicable to all loans extended to Self Help Groups by banks on or

after 01.07.2004.

The groups should repay the loans as per the schedule negotiated with the banks.

Interest incentive in respect of active loans shall be released to the groups once in six

months i.e. twice in a year based on the performance of the loan account obtaining as on

September, 30th and March, 31st. The SHGs which have completed six months of regular

repayment of bank loan shall become eligible for interest incentive.

The SHGs which have got bank loan in the month of July or January and which have

repaid the loan for at least one month prior to the cut-off date, i.e. September 30th and

March 31st shall also be eligible for getting the interest incentive benefit.

The loan accounts that are classified as overdue in the books of the bank at the time of

half-yearly closing and that which are classified as Non-performing Assets at year-end

closing are ineligible.

However, if they resume on-time repayments and regularize the arrears, they are eligible

for the incentive in the next half-yearly period.

Government will reimburse the interest burden of the groups over and above 3% per

annum charged by the banks. The subsidy amount will be directly credited to the savings

bank account of the eligible groups or will be distributed through Village Organisations.

The interest incentive scheme was extended to loans provided by banks to members who

have fully repaid (100% repayment) the Community Investment Fund loans to the

Mandal Samakhya as per the repayment schedule.


30/44

During the year 2008-09, interest subsidy of Rs. 195.30 crores was given to

7,14,930 groups. Cumulatively, an amount of Rs. 410.30 crores has been given

to 30,35,278 SHGs (including repeat finance) as Pavala Vaddi incentive from

inception of the Scheme.

Interest Subsidy to SHGs during 2008-09

S.No. Name of the District Amount (In Crores) No.of SHGs

1 All Andhra Pradesh 195.3 714,930

2 Anantapur 25.67 N.A.

3 Mahabubnagar 15.81 20,772

4 Visakhapatnam 9.68 21,586

Source : SERP and PLP Data

Monitoring

IIIrd dose onwards loans to SHGs were sanctioned based on Micro Credit Plan

submitted by the Self Help Groups. However, the utilisation of loan amount in

most of the cases was not as mentioned in the MCP. No monitoring visits were

undertaken by the bank branches due to work pressure, lack of sufficient staff

etc. However, SERP has placed a functionary called "Bank Mitra" in each bank

branch who is expected to liaise between branch and groups and serve as a

monitoring tool for the branch manager. Branches have to use this mechanism

effectively.

Observations during the study to be

incorporated

.


31/44

CHAPTER - VIAdequacy of Bank Loan and Repayment Performance and Employment

Generation

Loans and Credit linkage

The group members receive loans from three sources - (a) Loan out of Group

Corpus (b) Loans from Village Organizations from out of CIF and (c) Bank loan.

Loans from CIF by VOs are not given to all groups and are given selectively

based on the livelihood projects to be taken up by them. The broad features of

the loans are offered are as below:

Source ofLoan

Amount(Rs.)

Purpose Repayment(M)

Rate of Int. ( %)

Corpus Upto 10000 Any purpose,mostlyconsumption

12 12-24%

BankLinkage

50000-500000

Based ondose ofassistanceand MicroCredit Plan

12-60 Varies from bank tobank but ultimaterate of interest to thegroup is 3% due toPavalavaddi scheme

of GoAP. Groupsgenerally charge12%.

VillageOrganisation

50,000 For livelihoodprojects.

36 12%

In addition to the above a few selected members of the groups are also provided

loans by banks for housing activity @ Rs.20000 per member upto a maximum of

five members under the INDIRAMMA programme of GoAP.

Distribution of Loan

In respect of new groups where the credit demand is high, there is a tendency to

share the loan amount equally while the old groups encourage need based

distribution among the members for which the Micro Credit Plan forms the basis.


32/44

However, most of the groups have reported that equal distribution of loans will

enable them to understand the repayment liability of each member easily and

therefore they prefer equal distribution of loan.

Quantum and doses of credit

Sustained access to credit is no longer a constraint to SHGs in the state as

repeated doses and higher quantum of credit are given by the banks in general.

As mentioned earlier, it is the Interest Subsidy Scheme of 3% that is acting as a

motivator to the groups to seek higher quantum of credit. It is observed that the

groups which have been existence for ten years have received 5-7 doses of

assistance in their life period so far thus each loan having an average life cycle of

less than two years reflecting high velocity of funds. This was observed across

the districts and across the banking agencies.

Utilization of loan

Access to finance should result in retiring of high cost debts, besides investment

in productive assets, expansion of existing business and plan for future

contingencies. While retiring high cost debt and negligible dependence on

external borrowing are the positive features, the utilisation pattern of credit is an

area of some concern from capital formation point of view. No doubt SHGs are

provided purpose neutral loans and it is for the groups to decide the purpose for

which the loans are to be utilised. Nevertheless, the fact that even the groups

which have been in existence for more than a decade have not established any

appropriate micro enterprises and continue to use the credit for consumption and

strengthening existing livelihoods. While it is not expected that every group

member should emerge as a micro entrepreneur as such prospect could depend

on so many factors, the road map of economic empowerment can not be


33/44

complete without the milestones of micro enterprises at least wherever scope

exists. The SHPI also has been focussing mostly on facilitating flow of higher

quantum of loans to the groups than any serious efforts towards graduating

groups to micro enterprise stage. The SHG members were availing loan for a

wide range of purposes ranging from income generating activities to meet

expenditure on emergent social needs such as health, education, marriage and

consumption purposes.

Utilization of loan by the studied SHGmembers

Purpose Percentageof loanutilized

Types of activities

Agriculture 30 Purchase of agricultural inputs

AnimalHusbandry

12 Purchase of cows, buffaloes, sheep, goat,etc.

Non FarmSector

24 Bangle shop, Cloth Stores, Tailoring, Autopurchase, Kirana / General Store, Flower business,Vegetable / fruits business, Hotel business, mixturemaking etc.

Housing 11 Purchase/construction of house

Non Income

Generating/consumptionactivities

23 Clearing of non institutional debt, education of

children, medical/marriage and other miscellaneousexpenses.

An analysis of utilization of loans by the SHG members reveals that around 30%

of the loan amount was utilized towards crop production activities, 12% towards

animal husbandry 24% towards non farm sector activities and 34 % for non

income generating purposes .

As can be observed from the above table 66% of the bank credit is utilised for

activities that generate income to the members and the balance 34% towards

consumption and housing activities.


34/44

Adequacy of Bank loan

All the MCPs are not prepared based on the technical cost of the project/unit.

Further, since banks are not providing Loans as per MCP to the full extent and

also the loan sanctioned was distributed among all the members irrespective of

MCP it may be difficult to assess adequacy of loan.

As the average loan per borrower is at Rs. 14000/-, it is difficult to take up any

livelihood activity with this amount. However, it was observed from the study that

where loan availed is about Rs.30,000 to Rs,40,000 by a member, most of the

cases it was utilised to purchase additional buffaloes, utilise the money as margin

for getting auto loans etc. It is also observed that the beneficiaries of Indiramma

Housing scheme of GOAP, the members used the loan amount under SHG-BLP

for construction / completion of the house. In most of the cases, members utilised

the loans in their existing business only.

Repayment performance

Some banks are accepting repayment of loans separately and deposits in SB

accounts separately. However, some banks credit the repayments and deposits

into SB acount and debit the loan instalments to SB account. In case there is no

repayment towards loan, then also banks debit the instalment to SB account to

keep the account in standard status. To enable of this, some banks are not

allowing withdrawal from SB account for internal lending.

Repayment of 3 districts

Employment Generation

As the loans are mainly used for agriculture, dairy and Non farm activities in a

small range directly it generates employment to the family members. However,

in case of Hotel business - (4 to 5 members) , Auto - (2 members) and Mixture

making - (3 to 5 members) other workers also were engaged in each unit.


35/44

Observations on Implementation ofSHG Bank Linkage Programme

1. Broadly the groups continue to function in group mode in

their last 10-15 years of existence and activities like

savings, internal lending and repayment are carried out

regularly.

2. The members in general exhibit faith and trust in the

groups and would prefer to remain members of groups

for their life due to the self awareness it has created and

the solidarity and social security the group has provided.

3. The SHPI at the state level SERP ( Society for

Elimination of Rural Poverty) has established institutional

infrastructure in the form of Village Organisations,

Mandal Samkhyas, and Zilla Samkhyas to provide a

range of financial and non financial services to the

groups.

4. Banks continue to support the programme and SBLP

constitutes 20-50% of total loan portfolio of rural

branches and formed a significant component of rural

banking.

5. Repeated doses of credit provided with groups receiving

as many as six to seven doses of assistance in a period

of ten years.

6. Coverage of groups under Total Financial Inclusion (TFI)

programme in select villages involving high quantum of


36/44

credit ( max.of Rs.5 lakh per group) enabled them to

totally retire old debt and meet all their all credit needs.

7. The sustained access to finance has enabled the groups

to retire old debts, upscale current livelihood activities

and improve their economic status.

8. Despite the weakness in group dynamics, the groups

have been able to provide financial services to the

members, demonstrates the organisational sustainability

of the groups.

9. The recovery performance continues to be satisfactory

with NPAs ranging between 0.04% to 3% in the sample

branches.

10. Field functionaries placed by SERP at different levels

support the banks in monitoring the programme on a

regular basis.In addition to facilitating credit linkage,

SERP is endeavouring to deepen the provision of

financial services like insurance and pension to the

groups as a risk management measure.

11. Overall the programme has brought about considerable

improvement in socio economic status of the members

covered.

12. The members of SHGs were above to repay high interest

bearing loans from money lenders, and reduce interest

burden.


37/44

13. In Tadi village of Visakhapatnam district, to avoid any

misuse, one Village Organisation made it compulsory

that the books of accounts should be written by book

writer only and she should not be the member of that

group. in case any member is capable of writing books

of accounts they have to write accounts of other SHGs

and not their own books of accounts

14. In Visakhapatnam district, before Abhaya hastam

scheme was introduced, some of the SHG members

contributed Rs.15/- p.a. towards Aam admi Bima yojana

for land less labourers and Rs.85/- p.a. towards Janasree

Bima Yojana for others. Some members also pay

Rs.260/- p.a. towards Sanjeevani Health Insurance

Scheme run by Zilla Samakhya where the family of 5

members can avail services like free consultation,

discount on medicine, pathological tests, hospital

charges etc. from Network hospitals / medical shops.


38/44

CHAPTER - VIICONSTRAINTS AND SUGGESTIONS

Constraints:

1. Inspite of their existence in group mode for more than a

decade, the groups dynamics are not sound and

awareness about group objectives beyond thrift and

credit at member level was not total.

2. With no rotation of leadership dependence of groups on

leaders continues to be high and there is no clear

understanding of rights and responsibilities of

leaders/members.

3. Records maintenance needs significant improvement as

they are either not update or not accurate.

4. The groups continue to depend on SHPIs functionaries

for managing their affairs and provide guidance.

5. Some of the undesirable linkage practices of banks like

impounding savings in SB accounts, allowing loan

withdrawals only in installments, insistence of

Compulsory Fixed Deposits, Recurring Deposits,

Pressuring the members for taking insurance policies,

lack of systematic assessment of credit requirements of

groups, inadequate monitoring of groups functioning,etc.

continue to exist. Ex: APGVB, Kottur Branch - Prasanti

SHG - Bank A/c No. 1074047990 loan sanction Rs.4.00


39/44

lakhs and Rs.40,000 kept as FD. Raghavendra SHG -

Bank A/c No. 982 loan sanction Rs.4.00 lakhs and

Rs.40,000 kept as FD.

6. No organised efforts being made by SHPI to impart skill

development training to the groups or to motivate suitable

groups to take up micro enterprises.

7. Complacency with high recovery levels of the portfolio vis

a vis other loans, no immediate corrective measures for

arresting potential NPAs put in place.

8. Some groups lend outside the groups for various

purposes thus becoming mini moneylenders.

9. -496Default rates increased during 2008-09 after waiverof farm loans and waivers promised by some politicalparties. however, well functioning SHGs eventhoughthey defaulted the repayment to SHG loans, theinstalment was kept with the bank as deposit andinformed the bankers that incase of non-waiver of loans,

the same can be adjusted towards repayment.

Suggestions

1. Eventhough the Group availed loan of Rs.3.00 lakhs and

above it will take 2 to 3 years to get additional loan even

for small amounts. There fore, they are forced to take

loans from MFIs at higher rate of interest. Banks may

modify the loan products as per the requirement of SHGs

like 40 to 50% as cash credit and another 50% to 60% as

term loan as it will be meet the full requirements of the

Group members and will avoid members to take loans

from mFIs.


40/44


41/44

6. Identify branch officials newly posted to rural branches

and organise sensitisation meets.

7. To organise activity oriented training programmes based

on the groups choice to initiate the groups into Income

Generating Levels. Concerted efforts needed on the part

of all stakeholders to create an enabling environment for

motivating groups to take up more productive activities

depending on available opportunities.

8. Select a few Mandal Samkhyas and support livelihood

projects based on local resources and skills to promote

entreprenuership and give required confidence to groups

to manage the business operations.

9. Improve the records maintenance by having a time

bound programme.

10. To have periodical monitoring studies of the programme

in different parts of the state to suggest corrective

measures to be initiated for sustainability of the

programme.

11. Banks and SERP functionaries at the field level need to

synergise their efforts that will strengthen the programme

and the branch officials should make effective use of

tools like of Community Based Recovery Mechanism for

sustaining the recovery performance.


42/44

12. Stakeholders at state level should coordinate for building

reliable database on SBLP and have an MIS that will

serve as an effective monitoring tool.

13. There is lot of scope for cooperative banks to lend SHGs

as they got good liquidity after implementation of

Vaidyanathan package and Debt Waiver schemes. SHG

lending is more beneficial to cooperatives as they serve

more people and less staff because it involves less

processing time for loans, less efforts for getting

repayments from SHGs. SHG portfolio also gives low

cost deposits.


43/44

LIST OF SHGS VISITED DURING THE STUDYSl.No. Name of the SHG Name of the Bank District

1 Parameswari SHG Andhra Bank Visakhapatnam

2 Sri Sai baba SHG Andhra Bank Visakhapatnam

3 Sri Sai Lakshmi SHG Andhra Bank Visakhapatnam

4 Sri Maruti Mahila SHG Andhra Bank Visakhapatnam

5 Padmavathi Mahila SHG Andhra Bank Visakhapatnam

6 Pallavi SHG Indian Overseas Bank Visakhapatnam

7 Indira SHG Indian Overseas Bank Visakhapatnam

8 Dhanalakshmi SHG Indian Overseas Bank Visakhapatnam

9 Bharati SHG Indian Overseas Bank Visakhapatnam

10 Santi SHG APGVB Visakhapatnam

11 Pragati SHG APGVB Visakhapatnam

12 Deepa SHG APGVB Visakhapatnam

13 Raghavendra SHG APGVB Visakhapatnam14 Bhavitha SHG DCCB Visakhapatnam

15 Sri Sai SHG DCCB Visakhapatnam

16 Parvati SHG DCCB Visakhapatnam

17 Chaitanya SHG DCCB Visakhapatnam

18 Jyothi SHG DCCB Visakhapatnam

19 Savitri SHG Andhra Bank Anantpur

20 Srujana SHG Andhra Bank Anantpur

21 Vijayalakshmi SHG Andhra Bank Anantpur

22 Bhargavi SHG Andhra Bank Anantpur

23 Vidya SHG Andhra Bank Anantpur

24 Bhagawan SHG Indian Overseas Bank Anantpur 25 Sri Ganesh SHG Indian Overseas Bank Anantpur

26 Saraswati SHG Indian Overseas Bank Anantpur

27 Mahila Shakti SHG Indian Overseas Bank Anantpur

28 Padmavathi SHG Indian Overseas Bank Anantpur

29 Mahalakshmi SHG APGB Anantpur

30 Sai Ganapathi SHG APGB Anantpur

31 Balaji SHG APGB Anantpur

32 Anand SHG APGB Anantpur

33 Swasakti SHG APGB Anantpur

34 Mahila Shakti SHG DCCB Anantpur

35 Sahakara SHG DCCB Anantpur

36 Sri Ganesha SHG DCCB Anantpur

37 Sri Padmavathi SHG DCCB Anantpur

38 Bhavita SHG Andhra Bank Mahabubnagar

39 Sri Sai SHG Andhra Bank Mahabubnagar

40 Parvati SHG Andhra Bank Mahabubnagar

41 Sri Sai Mahila SHG Andhra Bank Mahabubnagar


44/44

42 Chaitanya SHG Andhra Bank Mahabubnagar

43 Jyothi SHG Andhra Bank Mahabubnagar

44 Prasanti SHG APGVB Mahabubnagar

45 Deepa SHG APGVB Mahabubnagar

46 Raghavendra SHG APGVB Mahabubnagar

47 Swaroopa SHG APGVB Mahabubnagar 48 Sri Dhanalakshmi SHG APGVB Mahabubnagar

49 Mahila Podupu SHG APGVB Mahabubnagar

50 Swarajyam SHG APGVB Mahabubnagar

micro finance study report

Documents