The Reserve Bank today directed public sector banks to provide credit to women self help groups at a rate of 7% per annum so as to get the benefit of interest subvention scheme under the Swarnajayanti Gram Swarozgar Yojana Aajeevika (SGSY) scheme.
"PSBs will be subvented to the extent of difference between the Weighted Average Interest charged and 7% subject to the maximum limit of 5.5%, for the FY-2014.
"This subvention will be available to all the PSBs on the condition that they make SHG (self help group) credit available at 7% in the 150 districts," the RBI said in a notification.
Likewise, the regional rural banks (RRBs) will be subvented to the extent of difference between the lending rates and 7% for the FY-2014 on the condition they make SHG credit available at 7%, it added.
The SGSY scheme comes under the Ministry of Rural Development which launched National Rural Livelihood Mission on April 1, 2013 to reduce poverty by building strong institutions of the poor, particularly women.
It aims to enable these institutions to access a range of financial services and livelihoods services.
The RBI further said that SHGs will be given an additional 3% subvention on prompt repayment of loan.
For all loans up to Rs 3 lakh, sanctioned to women SHGs on or after December 1, 2013, banks must charge an interest rate of 7%.
However, for loans extended between April 1, 2013 and November 30, 2013, banks should convert the rate of interest to 7% for all the existing loan accounts of the SHGs with effect from April 1, 2013.
Banks should submit their claims on a half-yearly basis as at September 30, 2013 and March 31, 2014, RBI said.
While for additional subvention of 3%, banks may submit one-time consolidated claims during the entire year 2013-14 latest by April 30, 2014.
The RBI further said that the limit of subvention for the next financial year will be communicated separately.