Lenders need to scale-up systems to expand 'Lakhpati Didi' scheme

In order to successfully expand the Lakhpati Didi scheme — which aims to empower women in rural areas by encouraging them to start micro-enterprises that would fetch them at least ₹1 lakh per annum — micro finance institutions (MFIs), including banks, will need to provide mentoring support, scale up systems, and ensure good asset quality for giving money to members of self-help groups (SHG).
 

Jiji Mammen, executive director and chief executive officer, MFI industry lobby group Sa-Dhan, said SHGs certainly helped women in livelihood through farm-related activities. But the existing scale of support in terms of loans to SHGs is small and the volume of economic activity will have to be bigger to have a Rs 1 lakh surplus with individuals.
 

This would mean that MFIs would need a different approach. Also, setting up livelihood missions at the state level would be crucial for effective implementation of the programme, he said.
 

Ajay Kanwal, managing director and chief executive, Jana Small Finance Bank, said his bank would certainly work on such a programme to support women entrepreneurs who are members of SHGs. At the same time, lenders will have to keep in mind the fact that the lending activity becomes scalable with expansion, including that of the size of the group.
 

Seconding Kanwal’s assessment, a senior executive with a MFI said the lender would have to provide special attention to manage systems and maintain good asset quality.
 

While working within a group, social influence helps in maintaining discipline for staying on course for repayments. The perspective changes when SHG members take individual loans and treatment from lenders would be different, said the MFI executive.

While presenting the Interim Union Budget for FY25, Finance Minister Nirmala Sitharaman had said that 8.3 million SHGs with 90 million women were transforming the rural socio-economic landscape with empowerment and self-reliance. Their success has assisted nearly 10 million women to become Lakhpati Didi already.

Buoyed by the success, it has been decided to enhance the target for “Lakhpati Didi” from 20 million to 30 million.

Not all members of SHGs have the motivation to scale up. Lenders would have to identify the person, handhold them and give loans. A cadre of mentors would be required for this activity, Mammen said.

Sa-dhan is working on a plan for creating 1.1 million entrepreneurs predominantly in rural areas in the seven states including Assam, West Bengal and Bihar, Uttar Pradesh.