core sector communique

NABARD to partner with Rural Development Ministry in expanding the Self Help Group movement

The Union Minister for Rural Development, Mr. Jairam Ramesh has stressed the need for expanding the women’s Self-Help Group movement, as a tool of empowerment and promoting economic well being. Interacting informally with media after a crucial meeting with NABARD officials in Mumbai today, the Minister said “the National Rural Livelihood Mission would connect at least one woman from every poor household across the country with self-help groups in five years. Presently we have 3 crore women who are members of SHGs and we have to raise it to 7 crore in five years".

Mr.Ramesh noted that at present the southern states of Tamilnadu, Kerala, AP and Karnataka account of 70% of women Self-Help Groups and 80% of credit flow. “This is a highly geographically distorted scenario, we need to spread the Self-Help Group movement across the country” he remarked. The focus of the new initiative will be on Madhya Pradesh, Chhattisgarh, Jharkhand, Bihar, Uttar Pradesh, Rajasthan and even Gujarat and Maharashtra. The Minister informed that the NABARD is creating a Rs 1500 crore fund to cater to the Self Help Groups in weaker districts. NABARD participates in the process by way of refinancing banks who lend to women Self-Help Groups.

Needed, flexibility in rural lending

Mr. Ramesh said there is an urgent need to bring in flexibility in lending norms of organized banks to Self Help Groups. “The SHGs require variety of kinds of loans, which the Public Sector banks are not being able to cater to. As a result the poor are driven to micro-finance institutions, who offer credit on flexible terms, but charge an exorbitant rate of interest.”

The Minister stressed the need for developing an organized and well regulated micro-finance institutions network but felt that the Microfinance Bill, in its present form has too many loopholes. “In its bid to protect the micro-finance institutions, it will kill the SHG movement” he said. The Minister re-emphasized that micro-finance institutions are not the instruments of alleviating poverty, "Micro-finance cannot provide a definite answer to the challenges of poverty alleviation, but it can lead to financial inclusion by providing credit to the customer as per his/ her own needs," he said.

Aajeevika Cell set up in NABARD

Mr Jairam Ramesh also inaugurated that ‘Aajeevika Cell’ in NABARD which will work in close coordination with the Ministry of Rural Development in achieving the goals of the National Rural Livelihood Mission. The NABARD CMD Mr. Prakash Bakshi said the Aajeevika Cell will facilitate convergence of wide variety of approaches and best practices to mobilize poor households into Self-Help Groups.