SHG rural credit rises to Rs.30,000cr
In what could bring cheer to the drought grappled rural economy, the rural credit availed by Self Help Groups (SHGs) in India has increased significantly by 40%. The rural credit for the financial year 2015-16 increased to reach an all-time high of Rs.30,000 crores against Rs.21,000 crores in FY2014-15. Moreover, the credit demand doubled in the eastern states- Bihar, UP, and Jharkhand.
A Self-Help Group (SHG) is a voluntary association of people generally from the lower economic strata. The members of the group, who normally do not have access to formal finance, come together to create a common fund by saving in a common bank account. The fund is then used for providing bank credit to the group, to help members start their own micro-enterprises.
The SHG fund is supplemented by the bank to provide credit which is used for activities such as starting a shop, a goat farm, rearing milch cattle, farm livelihoods, etc.
The SHG-bank linkage programme, the Aajeevika-National Rural Livelihood Mission (NRLM) was started in 2011 by the Ministry of Rural Development. Aided by the World Bank, it aimed to cover 7 crore poor rural households through SHGs to provide sustainable livelihood and improved financial services. The scheme was renamed as Deen Dayal Upadhyaya Antyodaya Yojana (DAY) in 2014 with a greater focus on skill training.
There are 26 lakh SHGs in the country comprising 3 crore members. A total of Rs.70,000 crores of credit has been disbursed to SHGs since 2011. The recent trends show that there is an overall growth in the number of SHGs and more women are getting empowered to undertake economic activities. After its success in Southern states, even the eastern states are doing well.
The government is encouraging SHGs, as micro-enterprises started by members provide income sources to the poor households, which helps in alleviating poverty, improving living standards and ultimately promoting rural development. For this, the government is building confidence among banks to lend more to this sector. It is also providing interest subvention to SHGs to enable them to avail loans at cheaper rates.
The government has kept a target of Rs.40,000 for rural credit to the SHGs in the FY2016-17. The government also aims to raise the number of SHGs to 70-75 lakhs in the next 10 years.
SHGs face multiple challenges which hinder their success. Some such challenges include lack of awareness among members about various schemes, lack of training to start micro-ventures, social discrimination due to an absence of homogeneity in the groups, and lack of cooperation and unity among members. Further, poor financial management in terms of book-keeping creates difficulties in availing bank credit and creates distrust among members.
