Defaulting SHG groups put bankers in a bind

Kadapa: Bankers are in a dilemma over extending financial assistance to the Self Help Groups (SHG) in the wake of erratic repayment by some groups in the district.

The decision of the administration to implement Revenue Recovery Act on SHG women who fails to repay the long pending outstandings specifies government is keen on initiating stern action in that aspect.

To assist bankers to recover the loans given to the SHGs and extend further loans, Indira Kranthi Patham officials have formed special teams comprising bankers , community coordinators and area coordinators

To assist bankers to recover the loans given to the SHGs and extend further loans, Indira Kranthi Pathem (IKP) officials have formed special teams comprising Bankers , Community Coordinators and Area Coordinators.

It may be mentioned there that if any group fails to pay monthly installment regularly for three months, the account will fall under the category of overdue accounts. Overdue accounts will turn into Non Performing Asset(NPA) if it is not paid in a fixed time frame.

Overdue accounts for Pavala Vaddi (25paise interest ) benefit. The IKP officials said that only 19,750 groups have secured pavala benefit of Rs 6.98 crore because of overdues. Officials in IKP feel that the groups have misused the Rs 150 crore given to them under Total Financial Inclusion (TFI).

According to the senior officials the TFI was introduced to help SHG members to clear all their other loans and convert banker assistance into money generating asset. However, most of SHGs used the funds for some other purpose, some to complete houses, under Indiramma Housing Scheme(HIS) and some others to perform the marriages of their children. Interestingly some SHG women turned as private money lenders as they are lending the amounts at abnormal rate of interest.

There are also allegations that the some bank managers who are also agents for some insurance and investment companies, prevailed upon members to invest in these companies, assuring good returns. In this backdrop, the priority for Indira Kranthi Patham (IKP) now is to ensure payment of over dues by SHGs as early as possible to prevent the accounts acquiring the NPA tag.

While defending the administration in implementing RR act on defaulting SHGs , District Rural Development Agency (DRDA) project director Ramachandra Reddy said this kind of action would be initiated as the final effort .

He expressed confidence in collecting the over dues through “sustained efforts.” Kadapa district SHG women are in number one place in clearing the over dues but there was problem with some groups due to various reasons “ he said. There are some groups which have not paid the outstandings despite several notices issued. He said this kind of situation will affect the purpose of the government in strengthening economic empowerment of women community.