Number of self help groups (SHGs) repaying their advances has come down to 85 per cent from 98 per cent in the last few years, according to a senior official in National Bank for Agriculture and Rural Development (NABARD).
After launching Housing Development and Financial Corporation (HDFC) bank's online market linkage programme for Self Help Group (SHGs) K V Raghavaulu, chief general manager, NABARD said that in the last 2 to 3 years number of SHGs which are repaying their loan amount has come down, he attributed the drop to increase in the lending rate by the banks and the margins added by the intermediaries.
He noted, intermediaries such as micro-finance institutions are adding 9 to 10 per cent in which the advances has given to the SHGs. For instance a bank lend money at 9 per cent by the time it reaches the beneficiary it will be 15 to 20 per cent due to the additional per centage added by the intermediary.
Number of SHGs in the country has increased to 32 lakh from 500 in 1991. It is estimated around 5 crore individuals are benefited through the credit link programme through this SHGs. Of the total SHGs 40 per cent are in the state of Andhra Pradesh with over 16 lakh members.
Problem for these SHGs is marketing their produced. Lenders and NGOs should find a solution to address this issue. He added, NABARD will provide grants for any marketing activities including conducting exhibitions, boarding and lodging of the marketing people.
Rajender Sehgal, head-financial institutions, PSUs and government business group, HDFC Bank said that the new online programme will enable SHGs to showcase their produced to HDFC's employees only, since the regulator Reserve Bank of India (RBI) will not allow bank to do any trading activities.
Initially the programme will showcase artisans embroidery work on garrments from Lucknow and also applique work in Pipli(Orissa) and other works of in Thiruvarur,kanchipuram, and sambalpur.teraacota toys from Cuddalore and art plate from Thanjavur and stone carving from Puri.
"Lack of marketing infrastructure deprives right value for the products produced by small enterprises and SHG's. This programme will give them support in a way of market linkage beside adequate credit for them. This programme will also crunch the intermediary which in turn will give a good return to the SHGs which are produced the products," said Sehgal.