Sthree Nidhi Credit Cooperative Federation, which was set up for women self-help groups (SHGs) a year ago as an alternative low-cost delivery solution to the private microfinance lending in Andhra Pradesh, is planning to expand its credit portfolio to Rs 1,500 crore in the current financial year.
To achieve this target, the fledgling organisation would raise Rs 1,000 crore from commercial banks and hopes to mobilise the remaining funds internally by way of recirculation.
“We are confident of raising the funds as banks are willing to lend to Sthree Nidhi. About five proposals are already under active consideration of the banks and we expect to clinch them in a couple of months,” G Vidya Sagar Reddy, managing director of Sthree Nidhi, told Business Standard.
The organisation is in discussions with Bank of India, Axis Bank, Indian Overseas Bank and State Bank of India among others, according to him.
After launching the operations on October 6 last year, the bank till date has disbursed Rs 365 crore to women borrowers covering around 62,000 SHGs out of 1 million SHGs.
In the first year, Sthree Nidhi had mobilised Rs 175 crore from Andhra Bank and State Bank of Hyderabad (SBH) while the state government and mandal samakhyas (federations of SHGs at mandal administrative level) had contributed Rs 110 crore and Rs 75 crore respectively towards the share capital.
The rapid scaling up of credit operations across the SHG network is a matter of time as the organisation completely works on an automated technology platform involving little human intervention with an upper limit of 48 hours for loan disbursement from the time of receipt of a request, according to Reddy.
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Built on an automated banking transaction system, Sthree Nidhi receives loan requests from mobile phones owned by SHGs under a common user group and processes the same using Internet, intranet and RTGS modes for providing the loan.
“We operate at 0.1 per cent cost as against 10 per cent of operational cost being incurred by the private microfinance institutions leading to high interest rates,” the bank’s MD said.
The bank charges 14 per cent interest on loans from SHGs of which a per cent each is being retained by the village organisation (VO) of SHGs and MSs respectively.
Above all, the government gives 100 per cent interest subvention to women borrowers on prompt repayment of loans.
Sthree Nidhi headquarters currently work with a staff of 19 members while about 8,000 personnel from the district rural development agency (DRDA) extend their services at the field level with no cost to the bank.
The cooperative bank has graded all the SHGs based on their repayment performance and the maximum amount of loan they can access is linked to their grades. This is of great help in bringing credit discipline among all the women groups, according to Reddy.