The Hindu : Tamil Nadu / Chennai News : Fall in SHGs' loan repayment rate: NABARD chief

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Saturday, Sep 11, 2010
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Tamil Nadu - Chennai

Fall in SHGs' loan repayment rate: NABARD chief

Special Correspondent

Women members of Self-Help Groups should start micro enterprises to earn more, says K.G. Karmakar

— Photo: S.S. Kumar

MAKING A POINT: (From left) J. Chandrasekaran, CGM, SBI Chennai Circle; Justin Oliver, Executive Director, Centre for Micro Finance, IFMR; K.G. Karmakar, Managing Director, NABARD; and K.S. Lakshmi, Secretary, Meenakshi College for Women, at a seminar in Chennai on Friday.

CHENNAI: The loan repayment rate of Self-Help Groups is falling, said K.G. Karmakar, Managing Director, NABARD, on Friday.

“The repayment by SHGs is not 100 per cent. It stood at 88 per cent the year before last and is falling further. Two reasons were attributed to it. Firstly, bank managers are not in touch with the SHGs and the loan members are not attending the monthly meetings. Bank managers should visit the borrowers at least once in three or six months to find out their problems,” he said.

Women members of Self-Help Groups should start micro enterprises to earn more, he said, delivering the special address at the national seminar on ‘Status and sustainability of microfinance in India,' organised by the Department of Economics, Meenakshi College for Women, and State Bank of India.

He said that about 85 per cent of SHGs were run by women and were successful as compared to mixed SHGs.

The women SHGs were disciplined, attended monthly meetings, repaid their loans promptly, maintained the savings rate and saved money for their family. Some of the SHGs run by men were also successful.

According to him, women members used the money to repay costly debts of money lenders, pay tuition fee, repair houses and purchase plots. They also purchased gold and hedged it. The male members used the excess money for temporary pleasure.

Urging the members to start micro enterprises, he said: “What these women members lack is marketing skill. Much has to be done on micro enterprises models and we have to train NGOs first.”

Talking about the sustainability of SHGs, he said that the dropout rate was quite high as the new member had to wait for at least six months to get credit and banks were not giving repeat credit.

Regional imbalances had to be removed as SHGs were concentrated mainly in southern states.

Justin Oliver, Executive Director, Centre for Micro Finance, IFMR, Chennai, in his keynote address said that to have positive impact, the poor should have access to complete range of financial services instead of credit.

Quoting a study, he said that Micro finance institutions had grown impressively over the last 10 years. This clearly indicated that people wanted to get credit. Mere access to credit increased new ventures by 30 per cent. Further surveys were needed to find out the results of micro finance.

J. Chandrasekaran, Chief General Manager, SBI Chennai Circle, said that it might be a possible solution to repeat cycles of credit to SHGs.

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