The Central Government has taken into account the default rates and is now striving to enhance employment and incomes of women throughout the country. As per reports, the Government is considering the establishment of a new and special bank for offering financing to women self-help groups through higher credit flows. There will be an expert committee that will be considering all such options for a new bank and in case an apex financial institution can cater to credit requirements of self-help groups throughout the country. The Streenidhi Cooperative model in Andhra Pradesh can be followed in this case.
There has been huge growth in self-help groups operated by women and this has come to the attention of the Central Government. The Government is reportedly of the opinion that there can be better and higher availability of credit for these groups by removing obstacles currently present while applying for loans via regular banking channels. There are fewer banks available in north-eastern and hilly areas and also SHG institutions do not quality always with regard to meeting the needs of working capital as imposed by banks. This new bank may be established by the rural development ministry which operates National Run Livelihoods Mission. The panel is expected to be spearheaded by the ex-secretary to the Indian Government, G C Chaturvedi. Currently more than 26 lakh SHGs (self-help groups) are linked to banks boosted by credit outstanding of close to Rs. 70, 000 crore.
The Government is also encouraged to set up a new bank for SHGs since the default/NPA rates are only 2.4% in this category which is abysmally low. Women’s groups will be helped by the NRLM with regard to starting income generating businesses and enterprises with credit obtained from banks. This also serves the mission of eradicating poverty in rural areas. NRLM is currently catering to more than 5 million self-help groups throughout India. SHGs were majorly predominant in Southern India but they are now spreading swiftly throughout Eastern and Northern regions of the country.
A dedicated SHG bank will be considered by the expert committee and there may be an alternative option such as an apex society comprised of federations of self-help groups like it is for the Streenidhi Credit Cooperative Federation in Andhra Pradesh. This experiment in the State has reportedly led to better credit access for SHGs.