NABARD, the National Bank for Agriculture & Rural Development will create a Rs.15 billion fund to cater to women’s Self-Help Groups in economically weaker districts in the country, Union Minister for Rural Development Jairam Ramesh said Saturday.
Ramesh said Nabard would participate in the effort by refinancing banks which lend to women’s SHGs.
Stressing on the urgency to introduce flexibility in lending norms of organised banks to SHGs, the minister said they require different types of loans which public sector banks are unable to provide.
“As a result, the poor are driven to micro-finance institutions, which offer credit on flexible terms but at exorbitant rates of interest,” Ramesh noted, after a crucial meeting with top Nabard officials here.
Calling for the need to develop, organize and regulate the micro-finance institution networks, Ramesh felt that the Microfinance Bill in its present form has “too many loopholes”.
“In its bid to protect the MFIs, it will kill the SHG movement,” Ramesh observed.
Elaborating on the SHG movement, the minister said that National Rural Livelihood Mission (NRLM) plans to connect at least one woman from each poor household with a SHG to empower and promote economic wellbeing.
“Presently, there are three crore women who are members of SHGs and we plan to raise it to seven crore in the next five years,” Ramesh said.
However, he expressed concern at the skewed and distorted development of the SHG movement in the country, with 70 percent SHG and 80 percent of credit flow concentrated in only four states – Karnataka, Andhra Pradesh, Kerala and Tamil Nadu.
Emphasizing the need to spread SHGs across the country, he said the new initiatives would focus on states like Madhya Pradesh, Uttar Pradesh, Chhattisgarh, Jharkhand, Bihar, Rajasthan and even developed states like Gujarat and Maharashtra.
However, Ramesh stressed that MFIs are not instruments of alleviating poverty, but contribute to financial inclusion by providing credit to customers as per their needs.
Earlier, Ramesh inaugurated the Aajeevika Cell of Nabard which will work with his ministry to achieve the NRLM goals