Mr S. Venkataraman (GM, State Bank of Hyderabad)
Mr Amarendra
Sahoo (Retd., CGM & RD, RBI)
Mr Sharad Yadav (ICICI Bank)
Mr K. N. Tiwari
(Director, Disha India Micro Credit)
Moderator:
Mr P. Satish (CGM, MCID, NABARD)
Discussion
Mr
Satish: The composition of the panel
today is interesting since it makes up the supply side and the audience, the
demand side….There are many of you who are members of SHGs. We cannot act like
an ostrich and ignore the problems facing the SHGs. SHGs are expressing
problems about credit flows. SGSY financing has been happening over the past
few years but NPAs are growing. Eight million groups have been formed but only
60% of them are credit linked. There are also problems of groups performing
well with the first line of credit but not being able to access the second line
of credit. The Ministry of Rural Development has come up with the NRLM where
the functioning of groups will be under the purview of the state. But so many
organisations have been working at the grassroots with SHGs - what will happen
to them? Sustainability of SHGs has to be kept in mind - we need to think of
original movement of women members and how it began with motives of thrift
rather than of credit.
Mr
Venkataraman: This is a very contemporary
subject we are discussing here. Almost 80 lac SHGs are there …out of them 63
lac are female SHGs and 44 lac have been bank lined with 36 thousand crores. From
that 30,500 crores are outstanding.
SERP has given good support - so has the state government. In the state
of AP, SHGs have no interest burden for amounts up to 1lac. The crisis in AP
was created by MFIs who did not look into the repayment abilities of the
borrowers. That gave impetus to the Malegam committee and the SRO model. There
has been lethargy in SHG repayment - people think that they can get away from
repayment - despite having to repay only the principle - this is the fallout of
the crisis. Now the focus is on the incremental loans (from first dose to 2nd
and 3rd.) We have found that the SHG are no longer cohesive, people are moving
from group to group and exceeding their repayment capacity. When we report information
to credit bureaus, we only report the name of the SHG and not the member. We
cannot keep track of the individual borrower in the credit bureau so a person
can shift groups and borrow beyond what she can repay. The original saving
motive of SHGs has lost its focus. After the initial credit linkage takes
place, savings habits decline. Economically it may not be viable to distribute
credit equally among group members which adds to the loss of cohesiveness of
SHGs. Adding to it is the low level of knowledge/financial literacy and how
members are engaging in traditional activities (for employment). Borrowings are
being diverted to consumption (30% of loans) - education needs to refocus on
the original concept of microfinance and make productive use of the credit.
Mr
Yadav: The SHG-bank linkage is a much more hard working model. It has 2 clear
and distinct roles: of the banker and the grassroots organisation as well. The
banker has expertise in assessing a credit application but not in capacity
building and hand holding (which falls in the domain of the grassroots
organisation). Last 5-6 years we have gone into a number chase, we have
increased penetration but only 30% meet the requirement of savings, etc. We should
not go into a number chase but focus on quality - until then it will be a
problem for the banks. SHG nurturing should continue after it has received the
initial line of credit (now, the nurture and hand-holding stops after it is
credit linked). We should see if SHGs are
in a position to utilize the credit - this should be looked into by the
grassroots organization. Organisations such as Mahavi have done a great job and
have maintained a clean portfolio - its role is to recommend SHGs to formal
banks. These institutions will encourage bankers to come forward.
Mr
Tiwari: For 30 years after my studies, I have been working on poverty
alleviation and have participated in movements that work for the poor. The
government has sort of hijacked the SHG model but has not nurtured it. It is
difficult to get continued lines of credit - SHGs get Rs.10,000 in the first
dose and then it peters out. MFI model when it started was based on the Bangladesh
model, which we had used in parts of Uttar Pradesh. However, there has been no
change in the poverty situation despite the prevalence of MFIs. People have
used MFIs to make profits but there are others who have started with nothing
and have worked at the grassroots. There should be a visible social change with
MFIs. Bankers only see those who are technically sound, have capital/equity and
think only such groups are viable. The attitudes of banks are biased in favour
of those who have the technical know-how and banks do not support those who are
at the grassroots and suspect their loan-recovery abilities. It is not
reasonable to withhold loans from small MFIs who do not meet credit bureau and
RBI requirements. We want to thank the private banks who have financed these
small organisations but after AP crisis they all stopped. Financial inclusion shouldn't be just a dialogue used by the RBI but something implemented on the
ground - there should be no double standards.
Mr
Sahoo: Now I am part of civil society since I left the RBI. It was mentioned
earlier that the State Bank of Hyderabad has done a great job with the AP
crisis which gave a big setback to microfinance. If the bank was doing so well then why
was the crisis allowed to take place? We have to work together to build social
capital and not just finance credit. The data has revealed that there has been
an increase in NPAs but the corporate sector has been a major part of the NPAs.
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