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SHG: PROSPECTS From 1992 to 1999, only 32, 995 SHGs were credit linked.

The growth rate has been spectacular from 1999 to 2007. It has slowed down thereafter. Table - 1
2011
No. of SHGs provided with bank loans Of which in southern region 4, 813, 684 2, 663, 569

Share of southern region (%)


Average disbursed loan per group (INR) Outstanding loans (INR billion)

55
122, 744 306.27

Commercial Banks have 71% of all loans outstanding SHG followed by RRBs with 23% share. Table - 2

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Agency

No. of SHGs

Outstanding loans (INR in million) 218, 798 70, 098 17, 376 306, 272

Commercial Banks Regional Rural Banks Cooperative Banks Total

3, 057, 175 1, 272, 845 483, 664 4, 813, 684

NPA has increased.


Table - 3
Loans outstanding against SHGs (As on Mar 31 2011) Amount of NPAs (As on Mar 31 2011) % of NPAs to loans outstanding (As on Mar 31 2011)

Agency

Commercial Banks (Public Sector)


Commercial Banks (Private Sector)
Regional Rural Banks
Co-operative Banks

214127.5
4705.1

10199
470.9

4.76
10.10

74300.5
19078.6

2728.2
1343

3.67
7.04

7 Rs: Regular Saving, Regular meeting, Regular internal lending, Repeat loans, Repayments, Regular book-keeping Rotation of leadership.

ISSUES:
1. South Orientation: Only 11% of BPL families are in southern states. But it accounts for 55% of SHG loan.

2. Average loan amount works out to Rs. 11, 000 per Group Members which is low.
3. Lack of leadership rotation in SHGs. 4. Poor financial literacy levels of SHG members. 5. Need for self-audit and improving record keeping of SHG accounts. 6. Greater use of technology in operations of SHGs and monitoring their performance.

SUGGESTIONS:
1. SHG lending should be re-designed by shift to the cash credit system. It would be initially sanctioned on the anticipated savings and disbursed would be based on actual savings. 2. Re-focus on saving first, credit later. 3. NGOs and SHG Federation should increase capacity building and develop market linkage by SHGs. NABARD SHG 2: NABARD has launched SHG 2 during 2012. The changes made are:1. Bank to encourage SHG members to open individual accounts. They graduate from community banking to individual banking.

2. Banks to meet entire credit requirements including economic and social needs.
3. Cash credit for SHG to be sanctioned for a period of 3 5 years, based on projected savings up to the end. 4. JLG may be funded within SHG. 5. Self rating mechanism by SHG 6. Banks to monitor SHG and capture SHG data through their core banking platform.