Andhra aims to create 10mn women lakhpathis

Turning the bank-SHG linkage into a potential vote catching slogan, Andhra Pradesh chief minister YS Rajasekhara Reddy today said his government would ensure that 10 million women self-help group (SHG) members in the state become 'lakhpathis' in three years.

Speaking at the launch of an exclusive microfinance branch (microstate) in the city by the Indian Bank on Tuesday, the chief minister said the government is determined to provide Rs 1 lakh crore loans to 10 million SHG members through banks.

This is the second microfinance branch being set up in Andhra by the Indian Bank, which proposes to open seven more branches across the country in addition to the existing 6 branches during the current fiscal.

Stating that 40 per cent of the country's SHG movement along with bank linkage programme is carried out from Andhra Pradesh alone, the chief minister said providing poor families with credit at affordable an interest was one way of ensuring that fruits of economic growth reach the common masses.

"We have targeted Rs 7,000 crore microcredit disbursement to SHGs during the current financial year as compared with just Rs 1,100 crore in the year 2003-04. This government will leave no stone unturned to clear all the loans taken from private money lenders at a high premium by these families," he said.

He promised to ensure close to Rs 500 crore credit disbursement to municipal area SHGs in the current year from Rs 340 crore last year.

The logic behind making 'Lakhpathis' out of women SHG members is to make each member qualify for availing of a loan of Rs 1 lakh at the end of the third year from banks. SHGs will be qualified for a bank loan after 6 months of operation and an average loan of Rs 50,000 per group.

There are about 6.87 lakh SHGs with over 8 million woman members in operation in the state. The government proposes to increase the number of women in SHG movement to 10 million through formation of new groups.

Andhra is the only state which provides interest subsidy to these SHGs linking their prompt repayment of loan installments, under which the women groups will have to pay only 3 per cent interest on their microcredit while the remaining will be reimbursed by the government.