Cabinet approves low cost loans for women self help groups

Move enables women to avail loans of up to Rs 3 lakh at 7% interest compared to 11.5-14% currently

Low interest loans will be provided to over 25 lakh women self help groups (SHGs) across the country under the centrally sponsored National Rural Livelihood Mission (NRLM).

The Union Cabinet last week passed a provision to lower interest to women SHGs, operating under NRLM, enabling them to avail loans up to Rs 3 lakh at an interest rate of 7% per annum.   

At present, they pay an interest of 11.5 to 14%.

Rural Development Minister Jairam Ramesh has said that the move would cost Rs 1,650 crore of which 75% would be borne by the Centre and the rest by the states.

The initiative, in the first phase, would focus on 150 backward districts, including the 82 Integrated Action Plan districts, affected by Naxal menace.

"The Women SHGs that repay loans in time will get additional 3% subvention, reducing the effective rate to 4%," the Minister said.

In the 150 districts, Central Government will bear the entire cost of the interest subvention from the market rate to 7%. The first phase would cost Rs 560 crore.

The Cabinet has also decided to do away with the BPL criteria in implementing the scheme.  

"The target groups under NRLM will be identified at the level of the community by the Gram Sabha and the Gram Panchayat," the Minister said. They would follow a set of exclusion criteria, automatic inclusion criteria and a set of deprivation indicators.

        
The Cabinet also approved the setting up an "autonomous, adequately staffed, professionally managed and empowered agency at the national level" to implement the NRLM, called the National Rural Livelihoods Promotion Society (NRLPS), under the Societies Registration Act. The NRLPS will act as the technical support unit of NRLM.