Tamil Nadu has become the second largest state after Andhra Pradesh in the self-help group (SHG)-bank linkage programme launched by the National Bank for Agriculture and Rural Development (Nabard).
In the state, 209,197 SHGs were credit linked with a financial assistance of Rs 2,791.65 crore in 2009-10, taking the cumulative number of SHGs credit linked to 852,791 (including repeat doses) with a bank loan of Rs 9,394.70 crore.
Nabard said that a pilot project on SHG-Post Office linkage was successful and that an additional revolving fund assistance (RFA) of Rs 2 crore has been sanctioned to the department of Posts for lending to SHGs.
Most banks were lending to Microfinance Institutions (MFIs) for expanding their SHG portfolio, since MFIs provide faster financial access to the SHG clientele with cheaper delivery costs.
Nabard estimates that more than 1,500 NGOs are involved in SHG-bank linkage programme. The programme should now focus on its sustainability by encouraging promotion of micro enterprises and activity-based groups and SHG federations among mature SHGs.
It recommends special training programmes for skill development / skill upgradation for SHGs to equip them to set up micro enterprises. This would help correct the regional imbalance or uneven growth in various districts and to ensure comprehensive coverage of the entire rural poor under the SHG fold, it said.
In areas where bank linkage is weak or non-existent, it said bulk lending or RFA to MFIs or NGOs was being considered. RFA to the tune of Rs424.60 lakh (cumulative) has been sanctioned to 10 agencies in Tamil Nadu so far. The amount released and outstanding as of October 2009 was Rs 4.23 crore and Rs 2.32 crore respectively.
Nabard has also raised concerns on the rising non-performing assets (NPAs) caused by declining recoveries. A study conducted by it, across five districts in Tamil Nadu, attributed the NPAs to non-adherence to the basic tenets of SHGs, various waiver schemes, special concession offered to government-sponsored SHGs and expectation of waiver by SHGs.