Study evaluates SHG-BLP programme

S Vishnu Sharmaa, INN/Chennai, @Svs037 

Study on Self-Help Group (SHG) and Bank Linkage Programme (BLP) in Andhra Pradesh, Madhya Pradesh and Odisha revealed that poor economic conditions, non-cooperation, non-repayment by other members of the SHG, expenses towards marriages, social ceremonies and medical emergency and expectations of loan waiver from the government were the main factors behind the unhealthy growth of NPAs in the three states.

The study was commissioned by NABARD and the NIRDPR team covered a sample of 663 individual members of SHGs from Andhra Pradesh, Madhya Pradesh and Odisha.

Team also elicited responses from 58 stakeholders like such as credit officers in banks, line department officials and office-bearers of Self-Help Promoting Institutions in the sample states in order to obtain a comprehensive view of the asset quality of the SHG-BLP.

The conclusions were arrived based on responses obtained from members of SHGs. The study assessed various aspects of credit linkage, income-generating capacity of the SHG members, asset quality of loan portfolio of the SHG-BLP, both in quantitative and qualitative terms.

Apart from covering economic indicators like income, expenses, savings, loans and investments, the study examined end uses of loans, various factors behind the growth of NPAs in the SHG-BLP, age profile of bad loans, credit counseling and observance of five principles namely regular meetings, regular savings, regular internal lending, regular repayments and regular book-keeping by SHGs for their long-term sustainability.

WR Reddy, Director General, NIRDPR, said last mile connectivity in financial inclusion gained momentum in India when National Bank for Agriculture and Rural Development (NABARD) pioneered SHG – BLP in 1992.

Started as a bank outreach programme, SHG-BLP transcended itself into a holistic programme for building human, social, economic, and of late, technological capital in rural India, he said.

As more than a quarter century has been passed after its launch, performance of the programme needs a review, hence the study was taken up, he said.

M. Srikanth, Associate Professor and Head, Centre for Financial Inclusion and Entrepreneurship, NIRDPR, said though the SHG-BLP was witnessing lower loan defaults by its members in its earlier years, bad loans have been mounting up in the recent past due to various reasons.

NPAs, a cause for great concern for the banks in India, in the SHG-BLP peaked to a record high of 7.4 per cent in the financial year 2014-15 and later reduced to 5.19 percent as on March 31, 2019. As very few studies have been undertaken on NPAs of SHG-BLP in India, the study gained significance, he said.

SHG-BLP, a brainchild of NABARD, is regarded as the largest microfinance programme in the world today. The programme has made an indelible mark on the Indian financial landscape by extending collateral-free loans to SHGs to the extent of Rs. 87,098 crore as on March 31, 2019.

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