Self-help groups the saving grace for borrowers

MADURAI: J Poonkodi of Sakkimangalam in Madurai remembers the many nights she spent hoping and praying she would never see the light of day. Come morning, her money lender would religiously show up at her house, demanding the 10,000 she had borrowed from him, along with the hefty interest.
Unable to tolerate the harassment, she sought the help of a neighbour, who introduced her to M Pandeeswari , president of a self-help group (SHG) in the locality.Pandeeswari promised to bail Poonkodi out of the mess and gave her an initial loan of 5,000 at 2% interest per month or 24% per annum. “The usurer was charging me 20% interest per month. I repaid the loan taken from the SHG on time,” said Poonkodi . Poonkodi has availed and repaid several loans from the SHG since then.
SHGs have an arduous task ahead of them as there are many people who are in desperate need of financial assistance. Pandeewari, president of Neela Magalir Mandram that primarily works for the welfare of women among the Narikorava community said most of the 20 members of her SHG were bailed out from the debt traps of usurers.
T Saroja, president of Bharathi Magalir Mandram, another SHG, said besides rescuing women from usurers, they had also pre-empted many from falling prey to them. “Our group is 10 years old. We have cleared all our bank loans. The district administration arranged a 2.5 lakh bank loan to our SHG with a subsidy of 50% a few years ago. While we re-finance our members at 12% interest per annum whenever the source of funding is banks, we charge 24% per annum when we extend loans from our own funds. Every month we hold two meetings and all the 20 members contribute 100 at every meeting. This is loaned out to members. As of now, we have 3.5 lakh in revolving funds with us,’’ Saroja said.
Collector U Sagayam says, “SHGs play a major role in emancipation of women. As per government statistics 16,420 SHGs function out of Madurai, which have extended loans to the tune of 450 crore. The district administration has provided 10.60 crore in loans to 265 groups to start and develop their own ventures for self sustenance during 2010-2011 .”
However, a matter of concern is that recently, even SHGs have started charging 24% interest, which is double the bank rate. A senior official coordinating the SHG movement said, “The district administration does not prescribe the rate at which SHGs should lend their members’ earnings.” Saroja sought to justify the high interest saying, “All members share the benefits equally. It was a collective decision to charge 24%.”