Sri Nidhi, the cooperative bank being launched tomorrow exclusively for women self-help groups (SHGs) and as an alternative to microfinance institutions in Andhra Pradesh, will be extending Rs 1,100 crore micro loans to its members in the first year.
This is in addition to Rs 900 crore microcredit budgeted for the current financial year by commercial banks under the SHG-bank linkage programme in the state.
Over 1.4 million SHG groups with close to 10 million women members, federated into mandal (MMS) and district samakhyas, are now members of this new bank.
Interestingly, these organised women groups had been the primary target of MFIs prior to state government's intervention that brought MFI operations to a standstill resulting in Rs 7,000 crore of unrecovered loans since last year.
The launch of the new bank for and by these SHGs under the aegis of the state rural development department is likely to make things more difficult for MFIs as Sri Nidhi will take only 48 hours to grant loan, which will effectively carry just 3 per cent rate of interest. It will also collect deposits from the members.
Sri Nidhi has been created with a Rs 300 crore share capital — Rs 100 crore from the state government and Rs 200 crore from the members. The bank is mobilising the remaining funds largely by way of debt from banks and also through deposits, according to Reddy Subrahmanyam, principal secretary, department of rural development.
The target of Rs 1,100 crore loan disbursement in the first year itself would mean a minimum of Rs 1 crore to be made available to each of the 1,100 mandal samakyas for sanctioning loans to individual SHGs under their jurisdiction.
“We have categorised the existing mandal samakyas into four groups based on their previous performance and the credit limit available to them would be determined accordingly,” Subrahmanyam, the brain behind Sri Nidhi, told Business Standard. Many of these samakhyas are eligible for a credit limit of up to Rs 3 crore, he said.
The organisation and the functioning of this bank is also unique. For, all the transactions will be made through regular mobile phones of these women groups. The technology platform used by the bank completely minimises human interface in the sanctioning process.
“This is going to be the most efficient organisation functioning in the micro lending space,” he said, adding it would have minimal staff for running its day-to-day operations.
While the state government will extend the interest subvention scheme under the existing Pavala Vaddi programme (3 per cent effective interest) to Sri Nidhi loans, the mandal samakhyas (MMS), the lending arms of the bank, is expected to earn income on these transactions from loan charges.
