Microfinance Focus, December 13, 2011: The Self-Help Groups-Bank Linkage programme has been in existence for the last two decades. Banks however continue to remain hesitant in serious lending to these SHGs and are more attracted to lending bulk loans to microfinance institutions.

Talking about the lack of financing that continues to cripple the sector, G. V. S. Reddy, CEO of SERP (Society for Elimination of Rural Poverty) said “As there is little credit flow, SHGs are borrowing at high cost which in turn leading to multiple lending and other consequences”.

He suggested SHGs to adopt a low cost delivery models in order to be more efficient and self-sustainable.

M.I Dholakia, DGM of the State Bank of India (SBI) said that although banks have contributing to the SHG sector, use of mobile platforms and technology can help in connecting remotest villages.

Kalpana Sankar, CEO of Hand in Hand, pointed out that simplifying the bookkeeping procedure is vital and is glad to see a technology solution to it. She urged NABARD to make this technology available to all.

She also discussed women-centric loan products such as pregnancy loans and government subsidies of Rs. 3000 for toilets.

S L Kumbhare, CGM, MCID, NABARD, suggested that the sector needs more responsible borrowing rather than credit expansion and asked SHGs to explore more options like graduating to Joint Liability Groups (JLG).

While a cooperative bank, Stree Nidhi was set up in AP in September this year to offer services exclusively to women SHGs, the Rural Development Ministry at the centre is reportedly planning to set up a dedicated national bank.