SHGs latch on to loan waiver idea

K V Ramana / TNN / Mar 6, 2008, 02:26 IST

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Self-help Groups (SHGs), which have been playing a key role in keeping the women vote bank intact, are gearing up to demand a similar waiver.

HYDERABAD: While the Congress-led UPA government at the Centre and Y S Rajasekhara Reddy-led Congress government in the state are still working out the net addition to their vote bank after announcement of the loan waiver scheme for farmers, there seems to be a spoiler taking shape in the villages.
Self-help Groups (SHGs), which have been playing a key role in keeping the women vote bank intact, are gearing up to demand a similar waiver.
SHGs came into prominence during Chandrababu Naidu's time with the then government taking the DWCRA groups to a different level by offering them soft loans through banks.
Political analysts say the groups played a key role in bringing YSR to power. Currently, there are about 6,36,674 SHGs in the state with 10-20 women members in each group depending on the activity the group takes up. So far, the total outstanding from these groups to the banks is about Rs 5,000 crore. "Though the government is offering 'pavala vaddi' scheme to them, we are already getting enquiries from these groups on the possibility of a loan waiver," a banker in Warangal, which has about 28,692 groups, told TOI. Along with SHGs, micro-finance institutions (MFIs) too play a key role in keeping the credit cycle going in rural parts of AP. But, this time, the MFIs are happy since there is no pressure on them from beneficiaries for any waiver as average MFI exposure to agriculture is less than 6%.

Analysts say, once banks formally take up the programme to waive farmers' loans, the SHG issue would come up and if not handled carefully, the groups would play a key role in the coming elections.
"The government is talking about pavala vaddi (3%interest) for the groups, but there are several groups still struggling to repay the principal. We would definitely ask government to waive the entire loan for now and give fresh loans so that we can continue to work in groups," G Kamala (name changed), a group leader in Karimnagar said. "They have done it for farmers only for votes. We are also voters and they should waive it for us too," she said.
The confusion the waiver scheme is creating among the farmers and the worry on the part of the banks in giving away further loans for the coming crop season are expected to result in increased demand for MFI loans. In AP alone, about four major MFIs together have a membership of over 30 lakh women with a cumulative loan disbursal of about Rs 2,000 cr. The institutions charge about 24% interest annually.

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