Date:25/07/2005 URL: http://www.thehindubusinessline.com/2005/07/25/stories/2005072501291400.htm

Back Commercial banks in AP urged to step up lending to SHGs

Our Bureau

Mr Rajiv Joshi, (right) an expert on micro-finance, takes a look at the brochure at a workshop on credit linkage to self-help groups in Visakhapatnam on Sunday. Beside him are Mr K. Suryanarayana, Deputy General Manager of Andhra Bank, Mr A.L. Nageswara Rao, General Manager, and Mr Kanna Babu, Director, DRDA. — C.V. Subrahmanyam

Visakhapatnam , July 24

COMMERCIAL banks in Andhra Pradesh have lent only Rs 225 crore by mid-July against the annual target of Rs 2,200 crore set by the State Government and therefore they have to step up lending, according to Mr A.L. Nageswara Rao, General Manager of the Andhra Bank and the convener of the State-level bankers' committee.

He was speaking at a workshop on "Micro finance and self-help groups" convened here on Sunday by the Hyderabad chapter of the Indian Banks' Association.

Mr Nageswara Rao said the Chief Minister was particular that Rs 2 crore should be lent by commercial banks to SHGs in each mandal and there were 1,100 mandals in the State. "Last year, the banks in the State lent Rs 1,200 crore and we felt that Rs 2,200 crore was a bit too ambitious, but still bowing to the wishes of the Chief Minister we accepted it," he explained to the bankers.

He exhorted them to meet the targets, as credit linkage to the SHGs was a very promising area. "Till now, Andhra Pradesh has been in the forefront in forming and financing SHGs, but Tamil Nadu, Karnataka and other States are catching up with us. We cannot afford to be complacent," he said.

He said banks should assist the SHGs in taking up self-generating activities and the finance should be timely and adequate. "If the banks do not rise to the occasion, the micro financial institutions may enter the scene," he said.

Mr Kanna Babu, Project Director, District Rural Development Agency, said micro credit plans would have to be prepared right from the level of SHGs.

Mr K. Suryanarayana, Deputy General Manager, Andhra Bank, said that for the past six to seven years the State had been providing micro-finance and credit linkage to the SHGs. The time had come for consolidation of the groups and to shift from consumption loans to income-generating activities. The recovery rate was excellent, at 98 per cent, but the performance of the banks should not be judged on the criterion alone, he said.

Mr Rajiv Joshi, an expert, said micro finance models were being implemented in over 50 countries, including advanced ones such as the US.