Women Self Help Groups to get low interest loans

New Delhi, May 6: Low interest loans will be provided to over 25 lakh Women Self Help Groups across the country under a central programme launched to wipe out absolute poverty from the villages through women empowerment.

Pursuant to the announcement made by Finance Minister P Chidambaram in the 2012-13 budget, the Union Cabinet, which met last week, has approved the provision of interest subvention to Women Self Help Groups, operating under National Rural Livelihood Mission (NRLM), enabling them to avail loans up to Rs 3 lakh at an interest rate of 7
per cent per annum.

Giving the details today, Rural Development Minister Jairam Ramesh said the initiative, in the first phase, would focus on 150 backward districts, including the 82 Integrated Action Plan districts, affected by Naxal menace.

"Today they are getting loans at 11.5 to 14 per cent rate of interest. In 150 districts, all women SHGs which are now getting bank loans at 11.5 to 14 per cent rate of interest will now get it at 7 per cent rate of interest," he said.

The Women SHGs that repay loans in time will get additional three per cent subvention, reducing the effective rate to four per cent, the Minister said.

In the 150 districts, Central government will bear the entire cost of the interest subvention from the market rate to seven percent.

In 392 districts, a majority in north India, women SHGs will get loans at seven per cent rate of interest.

"Rural Development Ministry will bear its 75 per cent cost and states will bear 25 per cent. The cost involved is Rs 560 crore," he said.

Dealing with 81 districts in four South Indian states-Andhra Pradesh, Tamil Nadu, Karnataka and Kerala-separately, Ramesh said, "here also, Central government will bear 75 per cent cost and state governments will bear 25 per cent."

He said a major chunk of bank lending for women SHGs goes to these four south Indian states.