Provide credit to women SHGs at 4%, President tells RBI

President Pratibha Patil today asked the Reserve Bank (RBI) to consider evolving a mechanism to give loans to women Self-Help Groups (SHGs), particularly those comprising members below the poverty line, at not more than four per cent annually.

However, the RBI said it will have to examine the issue.

"The RBI should consider evolving a mechanism under which women SHGs, particularly those comprising the below poverty line (BPL) category, are provided credit at an interest rate not exceeding four per cent per annum," Patil said after releasing a commemorative stamp to mark the Platinum Jubilee celebrations of the RBI.

She also asked the central bank to prescribe a cap on the interest rates.

When asked whether the apex lender would in fact do so, RBI governor D Subbarao said, "We have to examine the issue."

RBI Deputy Governor KC Chakrabarty, however, said the RBI does not lend to SHGs and it is banks which give loans to them, hence only banks will be able to take that decision. If banks find it feasible to lend at four per cent, they will lend, otherwise they will not.

There can be a system for a small group of people to get loans at concessional rate, but there cannot be a generalised system, he said.

He added that the poor is more worried about delivery of loans rather than its prices.