SHG Bank Linkage – Society for Elimination of Rural Poverty, Andhra Pradesh

The best way to show your appreciation for this project is to click some advertisements and keep a count of how many you clicked. You will be asked for the number of advertisements that you clicked before you can vote. The money generated through this supports our social action.

SHG-Bank Linkage Programme

Problem

• Banks have no trust in Self Help Groups in the initial stages of lending loans.
• Exorbitant interest rates of borrowing loans
• Lack of proper orientation, training and knowledge on identification of livelihoods and finances to the SHG women.
• Lack of proper coordination among SHG women and banks.
• Improper response and query resolution during bank visits

Solution

• Building trust among SHG members and banks.
• Issuing MFI regulation to protect the SHG members from the clutches of money lenders/MFI etc.
• Imparting need-based training to the SHGs and Branch Managers on the importance of bank linkage.
• Forming Community-Based Recovery Mechanism for effective coordination.
• Conducting Branch Managers’ training on SHG Bank Linkage guidelines.

Outcomes

• Facilitation of loans to SHGs up to 20lakh without any collateral security.
• Andhra Pradesh stood first in the country with 30% of the national share and a 99.50% recovery rate.
• Reduction in rate of interest from 13.50% to 9.5% on SHG Bank Linkage loans.
• Utilisation of around 80% of the credit towards investment 
• 90 lakh SHG women are availing of SHG Bank Linkage loans from all districts

Video

See Presentation

Gallery

Case Study

SHG-Bank Linkage Programme

Introduction:

The SHG Bank linkage programme emerged as the largest microfinance programme in the world and the State of Andhra Pradesh has been a torch bearer for the country in the implementation of the programme. 

Problems:

Banks had no trust in Self Help Groups for lending loans. The average lending rate per SHG was Rs. 5,000 to Rs. 10,000 only. SHG Women borrowed loans for exorbitant interest rates i.e 36% to 54%. The poor relationship between SHG women and Banks leads to improper response at the time of bank visits and problems in the preparation of loan documentation. 

Solutions:

SERP has taken care of imparting need-based training. A Community Based Recovery Mechanism has been formed for effective coordination, to reduce the time gap between repayment and renewal ensuring 100% recovery. MFI regulation of money laundering Act 2011 has been issued to protect SHGs. 

Outcomes:

Now the banks are giving loans to the SHGs @ Rs. 20 Lakhs without any collateral security. They have reduced the rate of interest from 13.50% to 9.5% on SHG Bank Linkage loans. 

Challenges:

Requesting banks for SLBC meetings to reduce the rate of interest and t waiver of processing charges, documentation charges, and stamp duty exemption to the SHGs while financing loans from banks. Lack of literacy made the loan documentation process a difficult task.

Innovation:

Developed a Web-based real-time analytical reporting system and an SHG Bank linkage loan application in the local language. A digitized Household livelihood Plan (HLP)/Micro Credit Plan (MCP) is also developed resulting in data accumulation. 

Opportunities:

The organization plans to support at least 2 women entrepreneurs from every SHG and Micro Food Processing Enterprises in every village and promote higher order enterprises at the Mandal level.

Summary:

The growth of SHG-bank-linkage in the state is phenomenal. From a meager amount of Rs.56.60 Crores in the FY 1999-2000 to Rs.39,392 Crores in the FY 2021-22 is an astounding success story. Andhra Pradesh stood in the first position in the country with 33% of the National share with a 99.50% recovery rate.

For more information, please contact:
Mr Kesava kumar Muthamsetti, Deputy General Manager at kesavakumarserp@gmail.com

(The content on the page is provided by the Exhibitor)

The best way to show your appreciation for this project is to click some advertisements and keep a count of how many you clicked. You will be asked for the number of advertisements that you clicked before you can vote. The money generated through this supports our social action.