RBI occasional paper moots for special funds for SHG

A Reserve Bank of India (RBI) occasional paper has mooted a special fund for self help groups (SHGs) to deal with regional imbalances in credit disbursement to poor, particularly in the eastern and central regions of the country.

At present, only one-fifth of the total loans to self help groups went into the eastern and central regions which accounted for more than three-fifth of the total poor in India.

The paper said that the average bank loans to SHGs in the western, eastern, northern, central and particularly in the northeastern region are much lower than their southern counterparts.

The RBI paper examined the outreach of Self Help Group-Bank Linkage Programme (SBLP) in the backdrop of growing banking and socio-economic divide between regions in India between 1996 and 2006.

 

The RBI occasional paper was authored by Department of Economic Analysis and Policy officials -- Pankaj Kumar and Ramesh Golait. The views expressed in the paper are personal and not that of the Reserve Bank.

The paper said that out of the total credit disbursed by scheduled commercial banks, the smallest category of Rs 25,000 and below accounted for only three per cent (14.2 per cent in 1996) of the total credit outstanding in 2006.