The SHG movement has witnessed a tremendous upscaling in terms of both mass (formation of SHGs and their linkage with banks) and flow of bank credit but stil remains weak in North West India. I have come across regularly at various interactions with bankers, formal or informal, some concerns which I have now classified into ten broad concerns. The clarifications as stated about each concern are also provided and if understood and internalised, I am sure would bring about the enhanced flow of credit to SHGs in north west India. We must remember that any nation’s development requires among other parameters the access to credit to all segments of society, which is the objective of the SHG movement. The ten concerns and clarifications are stated in a question and answer format as below.
1. Query – A new President and Secretary were elected by the group members, they were advised to open a new account for the SHG, they did not return to complete the formalities.
Clarification – There is no need for a new account, the SHG has to pass a resolution about its new office bearers and thereafter record it, then it should be incorporated in the bank records, the same account continues even if the office bearer changes and is to be so operated.
2. Query - The SHG is not taking loans for income generation, should we disburse the loan ? Has the stamp duty been waived.
Clarification - Again no need to impose conditions for income generation, this is a credit outreach movement, hence we need not stress on income generation activities only for availing the loan from the bank. The SHG has to decide the need for credit, we may guide it only in case it is observed to be requiring guidance. The stamp duty now stands waived now for SHGs in most states, atleast for Punjab it is confirmed.
3. Query –I or my staff at the branch do not know rating norms ? Also, Where is the time to know the SHG and its working.
Clarification – The rating norms are developed by each Bank and are also available in general terms from the local office of NABARD or the LDM of the district. Each bank has its norms as also the CDPO ICDS / NGO which has formed the group. Rating means a formal mechanism to assess the quality of the group ( number of members, attendance at meetings, savings collection, loan repayment etc), the quantum of loan is to be linked to the quality of the SHG. The staff should attend the SHG meetings to build trust and to assess the group dynamics, atleast once a meeting should be attended when the group is maturing and then before credit linkage also. All members at the branch, if sensitised, can build ties with the SHGs irrespective of hierarchy. As time is spared for comparatively better off clients, some time can be taken out for SHGs also.
4. Query - There are defaulters in the group, our bank branch cannot lend to defaulters or at that village etc most residents are defaulters ? A second query, I thought SHGs comprise of women members only, yet a SHG comprising male members has been formed and has sought the sanction of a loan.
Clarification - If there are two / three defaulters to banks as members of a SHG, the group needs to simply pass a resolution affirming that none of them will get access to the bank loan to be sanctioned to the SHG and ensure that it happens. We need to avoid type casting some villages also as villages comprising of defaulters, we need to reach out to them. Thirdly, recovery rates for General SHGs which are well nurtured are normally satisfactory (mostly reported to be over 90 %), so it would be ideal to establish credit relationships with SHG members with confidence. SHGs can have as members women or men, there is no bar as such on men forming SHGs but by experience SHGs of men require extensive nurturing.
5. Query - These are private SHGs - how to trust them and disburse loans? I am comfortable with what were called SGSY groups formed by the DRDA.
Clarification - There is nothing labeled a private SHG - there are certainly groups formed by the DRDA / Gramin Sevika which do get subsidy from the GOI and the more numerous and normally labeled General SHGs (as per norms developed by NABARD) established by CDPOs ICDS / NGOs as also other agencies such as Farmers Clubs / Dairy Associations etc, even an committed individual can form a SHG - the banker must know the group members and rate it to trust it and to disburse loans. It would be ideal to visit bank branches nearby which have a sound relationship with SHGs and replicate their strategy as appropriate.
6. Query - I am worried about NPAs at my branch ? My auditors are raising objections about loans to SHGs for consumption / daily needs purposes and insist on loans to SHGs to be linked to income generation, they also take savings aggregated by SHGs to mean only the amount deposited in the savings bank account by SHGs at the branch for considering a loan to the SHG.
Clarification – Well, considering Punjab where I worked in the field extensively, the total loan outstanding at any branch and its ratio to total loans being disbursed to SHGHs by a branch, its too small, any impact on NPAS by a default is minimal. The main objective must always be to know the group and its members, not to summarily reject their initiative. In any case, recovery has normally never been a problem issue once a SHG has been nurtured properly with appropriate capacity building. Secondly, it’s a fact that auditors are themselves not clear when such advise is received from them, these issues are well settled and clarifications available on the RBI / NABARD websites also.
7. Query - We asked the members to bring all their savings in cash to the branch for considering the loan to be given to them and they refused.
Clarification - The advise was incorrect and justly refused, the total amount in internal circulation with the SHG members as evident by the accounts registers is to be taken as savings plus any amount at the Savings Bank account with the bank for consideration. Advising the bringing in by the cash mode the total savings at the bank is incorrect.
8. Query - The SHG members never approached me the Branch Head for a loan, yet a reference about refusal by the branch for loans to SHGs has been made to the district officials etc.
Clarification – What most officials may not know is that even the gunman is at times turning away the SHG members - specially the poorly dressed members. The staff at the customer service desk are also at times turning them away due to lack of knowledge about extending a loan or other related reasons. Branch heads need to actually ensure that direct access to SHG members is there by empowering animators / group leaders, they may consider teaching their staff and also involve them actively for reducing attitudinal barriers.
9. Query - I will give the loan in installments, the amount is huge and cannot be handled by the SHG.
Clarification - This development happens as groups become older - they repay their earlier loan and then seek more credit, their savings also increase in the meantime, hence a higher loan amount is requested, the branch is to rate the SHG, study its track record, meet the members at group meetings and find out their concerns / needs but the mode of disbursing in installments the loan should be avoided. Related to this, do not state in the books loans for dairy / stitching etc if its for consumption purposes, the files / books should state the purpose transparently, a tendency which has been noticed at some branches. The groups credibility only has to be analysed by the branch, I have observed a PSU Bank branch disbursing Rs 2 lakh to Rs 2.50 lakh to SHGs for essentially consumption related purposes after rating the SHGs in depth and holding extensive discussions with members. Our inability to change our mindset about the ability of the poor or comparatively poor to handle credit even after their capacity building needs to be reoriented.
10. Query - What is the role / purpose of the agency - CDPO / NGO which promotes SHGs, why this importance to them from major institutions / district administration ?
Clarification – The role of the CDPOs / NGOs / Trusts / Not for Profit Companies is the development of the poorer and unreached by credit sections of our society, the CDPOs / NGOs will form / nurture the SHG, teach them how to maintain accounts / proceedings, check the books and sign them, facilitate opening of savings bank accounts and sponsor their loan application etc. both the bank and agency should know each other professionally and maintain direct contact inclusive of names / telephone numbers and share observations. Any problems with sponsoring agencies such as group quality, lack of coordination, lack of checking of books etc.can be shared with them firstly in meetings and then with the DDM NABARD / LDM / DRDA etc. In case grants are purveyed to the agencies by institutions such as NABARD, it is for ensuring the appropriate build up of mass in the movement and the capacity building of members / groups. Ultimately, all stakeholders are working for separate institutions but engaged in the common purpose and drive for financial inclusion.
(These are the personal views of the author and not of his employer).
Comments
Post a Comment