Beginning from Feb 1, 2014, all Banks (public sector banks, regional rural banks, cooperative banks and private banks) will lend to all women Self Help Groups (SHGs) at upfront 7 per cent interest (for loans upto Rs. 3 lakhs) in 150 select backward districts.
"These SHGs will get a further 3 per cent subvention on prompt repayment, thus the effective charge on all such loans will be 4 per cent only. In addition, all women SHGs with outstanding loans (from 1st April 2013 onwards for loans upto Rs. 3 lakhs) will pay interest only at 7 per cent from February 1st. They will be reimbursed the differential interest amount for the period 1st April 2013 to 31st January, 2014," a government release has stated.
In the remaining districts, women SHGs that are (National Rural Livelihood Mission) NRLM compliant and are regular in repaying Bank loans will enjoy interest subvention on reimbursement basis, making effective interest 7 per cent for loans upto Rs. 3 lakhs.
NRLM has set out with an agenda to cover 7 crore rural poor households across all the 2.5 lakh Gram Panchayats in the country through 60-70 lakh self-help groups (SHGs) and federated institutions of the rural poor women in a period of 8-10 years and provide hand-holding support to help them come out of poverty. Interest subvention on the loans taken from the Banks is a significant step in this direction to promote the livelihoods of rural poor, by making institutional credit accessible at lower cost.