Private SHGs look to govt for financial assistance

Bengaluru Slums Women

State govt’s Ambedkar corporation lends money only once

Valli starts her day by sending her children to school. She constantly worries about how she would pay their school fees. “A self-help group (SHG) helped me a lot in managing my expenses, but it’s not sufficient,” she informed The Observer.

Valli, who lives in a one-room rented house, said: “I have taken a loan from multiple private sources and find it difficult to pay them back with heavy interest.”

Most women who take help from SHGs spend the money on their children’s education.

Valli said the first person she saw in an SHG was her mother during the 1980s. “My mother used to make agarbattis and earn Rs 5 a month,” she said. Asked how an SHG works, she said: “Each member of the self-help group saves Rs 500 and lends a member who is in need, with 2 per cent interest. The interest may or may not get divided among all the members of the group.”

Most government corporations lend SHGs money with a certain subsidy amount. Hemant Kumar, Deputy General Manager, Dr BR Ambedkar Development Corporation, said the corporation provides microcredit to SHGs to help them start their businesses. For a group of 10 members the loan amount is Rs 2.5 lakh; for 20 members, the loan provided is Rs 5 lakh. Each person gets an equally divided amount.

“Only 4 per cent simple interest has to be paid in 36 monthly installments. We give subsidies as well, depending on the amount of the loan,” he said.

The criterion to avail of a loan, he said, is that the SHG should be involved in group activities like pickle-making, agarbatti-making or any other business. The group’s annual income should be Rs 1.50 lakh (rural areas) and Rs 2 lakh (urban areas). All members should have a BPL card, a caste certificate, a ration card, an income card and Aadhaar card, and should belong to scheduled castes. “We help them with various schemes like Panchratna and NMRL.”

He continued: “Not only us, but the women and child welfare department also helps SHGs. We’ve been working for 35-40 years, and have sufficient applications from SHGs. There is no hesitation from their side when it comes to availing loans. But it often happens that the SHGs don’t pay the amount back and we are helpless. It takes three months to complete the loan process. A committee headed by an MLA takes decisions regarding the matter.”

When Valli and her team went to the corporation, they were denied entry inside the office. “We just went there to ask about certain schemes,” she said.

Smaller banks like Ujjivan charge 7 per cent interest, and sometimes more than 10 per cent interest. When approached, Ujjivan Bank informed The Observer, they cannot share any information.

The problem with loans from the Ambedkar corporation is that it lends only once, whereas other sources and banks can lend any time after the first loan is repaid.

Kausalya sends her seven-year-old son to a school which costs her Rs 50,000 a year. Along with tuition fee, the expense rises to Rs 78,000. “The SHG has helped me to take care of my son’s education.” She says she wants to start her own tailoring business. “I can’t because I don’t have any savings to buy a sewing machine which costs around Rs 8,000.”

Jeeva, an old member of an SHG called Valarpirai Sangha, was once approached by a man who claimed to belong to a corporation. He asked her to take Rs 20,000 and give Rs 4,000 in return. She did. But after a few days, he asked her to pay Rs 650 as interest. She couldn’t do anything. Taking advantage of her poor academic background, the man made her sign various documents.

Valli said government intervention is needed because working in an SHG is not easy  because it works on trust. For instance, if three people want Rs 20,000, there will be fights. “Everybody has an SC certificate in our group, but still no loans are given to us.”

SHGs meetevery month with a leader making notes in two long books.The first book is called minutes book (to collect attendance, savings, account, interest, loan amount); the second book is used to makes notes on loan repayment.

Asked how the Women and Child Department is helping SHGs, Savitha YD, Senior Assistant Director, said it has a scheme called Streeshakthi whose benefits can only be availed by the government SHGs. She refused to share any further information with The Observer.

According to information put up on the website of Directorate of Women And Child Development, Streeshakthi Groups were formed to inculcate the savings habit in the members empowering the women economically. About 20 members who are from below poverty line families, landless agricultural laborers and SC/ST women join hands.

“My mother-in-law says if she gets a loan from the government, she would open a  vegetable shop. My husband, who pays rent for the car he drives, can buy a car and do business. We have no other options but to rely on SHGs and local moneylenders who lend at a very high interest rate. The best part about corporation/government loans is that they provide subsidies. Construction workers use their labour cards to avail of certain benefits from the government but what about street vendors and drivers,” Valli said.

As per data shared by the Ambedkar corporation, the financial achievement of the corporation under the Microcredit Scheme was Rs 37.94 crore in financial year 2020-21, plummeting to Rs 5.25 crore in 2021-2022.

Yukta Mudgal
Trainee Journalist at IIJNM.

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