"PSBs will be subvented to the extent of difference between the Weighted Average Interest charged and 7 per cent subject to the maximum limit of 5.5 per cent, 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 per cent in the 150 districts," the RBI said in a notification.
The SGSY scheme under the Ministry of Rural Development was launched to reduce poverty by building strong institutions of the poor, particularly women.
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 per cent. However, for loans extended between April 1, 2013 and November 30, 2013, banks should convert the rate of interest to 7 per cent for all the existing loan accounts of the SHGs with effect from April 1, 2013.
Dion Global Solutions Ltd.