R Radhakrishnan, Centre for Economic and Social Studies, Hyderabad, has been appointed as chairman of the committee, which is expected to submit its report in July. Radhakrishnan had earlier headed an expert group on agricultural indebtedness.
SGSY is a credit-cum-subsidy scheme where credit is a critical component and subsidy is only an enabling element. But the financial performance of the scheme (since its inception in April 1999 to February 2008) shows that only Rs 13,538 crore of credit was mobilised from banks while the cumulative target for all these years was Rs 25,901.4 crore. This takes the average credit mobilised from the banks per year to a poor 53.87 per cent.
According to officials, there are 3,005 bank branches that have disbursed loans less than 25 per cent of credit targets in 2006-07 and a majority of these have even recorded zero lending.
"We need more support from the banks. With their revenues running into lakhs of crores, let the banks come forward to assist the poor," said Minister for Rural Development Raghuvansh Prasad Singh.
During the year 2007-08, a total of 436,518 applications were submitted to banks under SGSY but only 244,338 loans have been sanctioned and actual loan has been disbursed in respect of 208,712 cases (47.8 per cent) only. At present there were 178,681 loan applications pending with banks as on December 31, officials said.
Taking note of the problem, even a standing committee of parliament had earlier expressed concern on pendency and rejection of loan applications.
"The applicants approach banks with great hope and expectation, but they feel let down when their applications are rejected on flimsy grounds or due to cumbersome procedures," the committee said.
The committee constituted would examine the constraints in the adequate flow of credit to the self-help groups (SHGs) under SGSY and would suggest measures and strategy for effective credit linkages to the SHGs. The committee recommendations can lead to a major overhaul of the SGSY.
"Apart from reviewing the status of credit flow to SHGs and individual beneficiaries under SGSY since its inception in April 1999, the committee will examine the policy environment and guidelines governing the credit under SGSY. The committee would analyse the ambiguities, constraints and causes for inadequate flow of credit and also look into innovative experiments emanating both from public institutions and NGOs for enhancing flow of credit," one official said.
The committee would also focus on improving the performance of banks in credit mobilisation as it would also suggest ways and means for training, sensitisation, incentives and disincentives for bank officials dealing with the scheme.
Joint Secretaries of SGSY and Banking Division (Finance Ministry), principal secretaries (Rural Development) of Andhra Pradesh, Rajasthan and Bihar and representatives from RBI, NABARD, SBI and National Institute of Rural Development (NIRD) are members of the committee.
Professor G S Bhalla of JNU, Professor D Narasimha Reddy, former dean, School of Social Sciences, University of Hyderabad and Professor S L Shetty, director, EPW Research Foundation are experts co-opted into the committee.
