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Being part of self-help group has become more of burden than help for Rural Women in India

Until June 2016, Rs 9,000 crore in loans disbursed under the National Rural Livelihood Mission had turned NPA since 2013-14, according to government data

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Rural Population in India. Image source: Wikimedia Commons
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August 20, 2016: Nirmala Devaki borrowed Rs 50,000 for a cousin’s wedding from her self-help group (SHG) about 2 years ago. SHG is one of the 3.9 million across India that offers loans as small as Rs 10,000, including for marriages.

To Devaki, a landless farmer from Dastikoppa village in Karnataka’s northwestern Dharwad district and one of approximately 40 million SHG members nationwide, the monthly interest rate of 2 per cent charged by her SHG, Gayatri Sevasahaya, seemed easy to handle.

Today, Devaki owes the SHG nearly Rs 1 lakh, a sum the widow with five children says she, like 8 million women, cannot pay back. Her family survives on Rs 5,000, which it earns from selling the milk of its one cow. “Being part of a self-help group has become more of a burden than a help,” she complained.

Across India’s villages, over the last three years, Rs 9,000 crore given by banks to SHGs, under the National Rural Livelihood Mission (NRLM), a government programme set up five years ago to boost rural incomes, have turned into non-performing assets (NPA), or loans in danger of being written off, much like the bad-loan crisis unsettling India’s commercial banking system, with more than 5,000 wilful defaulters owing banks Rs 56,621 crore, as IndiaSpend reported in March 2016.

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At 12 per cent of the Rs 77,650 crore the NRLM has lent over the last three years, the NPA figure may appear low. The corresponding NPAs in the commercial banking system for corporate sector are 5.5 per cent up to March 2015, according to Reserve Bank of India data.

The scale of the NPAs in the SHGs pale in comparison to corporate NPAs: Rs 9,000 crore owed by 8 million women is less than the Rs 9,478 crore default of one commercial defaulter, Lloyds Steel, second on the corporate NPA list.

The defaults of the women from SHGs are warning signs of similar stress and indicate that the Mission’s goal of organising up to 90 million rural households into SHGs over the next decade may have overambitious targets, inadequate safeguards and could jeopardise the very livelihoods it hopes to improve.

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There are two rules to lend money, said micro-finance expert M.S. Sriram, an economics professor at the Indian Institute of Management, Bangalore: One, assess the creditworthiness of a consumer, as banks do; two, penalise defaulters, which means customers can assess their repayment ability.

NRLM. Image source: Wikimedia Commons
NRLM. Image source: Wikimedia Commons

Those rules were ignored by banks lending to India’s largest companies, and they are being ignored now, as the NPA crisis similarly grows in rural India.

There are two reasons for the unfolding rural debt crisis involving women. One, SHGs are not educating and training rural women on the basics of smart borrowing, how to invest and spend wisely. Money borrowed for income-generating activities such as stitching, candle making or farming, is often spent on personal expenses, from weddings to home construction. Two, banks are aggressively pushing loans through SHGs to meet the government’s loan targets, without similar efforts at checking where this money goes.

You can hear stories like Nirmala’s in rural north India too. Mamta Kanwar, of Niwaru village in Jaipur, borrowed Rs 50,000 from her SHG, Om. She then distributed it to the group’s members so they could invest in stitching units. But they spent the money for personal purposes. Today, three years later, the Rs 50,000 has become an NPA.

Until June 2016, Rs 9,000 crore in loans disbursed under the National Rural Livelihood Mission had turned NPA since 2013-14, according to government data.

Stories from rural India reveal why loans are turning bad: Bankers appear to be scrambling to meet government-set loan targets, sacrificing due diligence.

Consider the example of Kalghatgi. The town has 1,907 Stree Shakti (Woman Power) SHGs with more than 25,000 registered members, which is more than the town population of 17,000, according to the 2011 census. This is because each of these members is registered with more than one SHG.

“The NRLM is not a government subsidy scheme,” said B. Lokesh, senior mission executive (Financial Inclusion), NRLM. “It is basically helping banks increase business. SHGs are a priority sector under RBI (Reserve Bank of India) guidelines, which means banks have to lend a certain percent of their total credit to SHGs.”

Banks are given targets, starting with an initial loan of Rs 50,000. If this amount is repaid, banks have to finance that SHG with an amount of up to Rs 1 lakh, which can later be raised to Rs 3 lakh. The branch manager decides the final loan, based on an SHG’s records, book-keeping, and repayment. So far, each SHG has received, on average, Rs 2.5 lakh.

SHGs are judged on the basis of regular meetings, regular internal lending, and bank linkage. There are no clear instructions or conditions to loan money. “Banks do not enquire about the purpose of the loan from the self-help groups,” said Vasanth Gowda, a field worker from Ujjivan Mini bank in Dharward.

“Members show handmade items to the government official for loans,” said Gaourava Ningappa, a member of an SHG in Tabakadahonnalli village, Kalghatgi. “But once the loan is sanctioned, and the money is withdrawn, they will stop whatever business they took the loan for and use the money for personal expenses.” (IANS)

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India China’s Fight Over the Doklam Plateau Explained

Doklam or Donglang, is a disputed area between China and Bhutan located near their tri-junction with India

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picture from- indiaopines.com

By Ruchika Verma

  • India and China have an old history of disputes
  • This time, the dispute is regarding the Dokplam Plateau
  • The area is of strategic importance for both the nations

Disputes between India and China are not at all uncommon. The rivalry between the two nations is famous. There have been several disputes between the two about the India-China border in past, and there seems to be no stopping for these disputes in the present or future, for that matter.

India and China have a n old history of repeated disputes. zeenews.india.com
India and China have a n old history of repeated disputes. zeenews.india.com

In June 2017, the world witnessed yet another dispute arising between India and China. This time the dispute was about China building a road extending to Doklam Plateau, which both nations have been fighting over for years now.

Also Read : China is likely to get involved if India disrupts $46 billion China-Pakistan Economic Corridor

History of the dispute 

Doklam or Donglang (in Chinese), is a disputed area between China and Bhutan located near their tri-junction with India. India doesn’t directly claim the area but supports Bhutan’s claims on it.

India fits into the picture, as this plateau is an important area for India. Not only is Bhutan one of the biggest allies of India; China gaining access over the Doklam Plateau will also endanger India’s boarders, making them vulnerable to attacks.

Dopkam plateau is an important area near India, China and Bhutan's borders.
Dopkam plateau is an important area near India, China and Bhutan’s borders.

Apart from the hostile history of the two nations, the Doklam Plateau is also important for India to maintain its control over a land corridor that connects to its remote northeastern States. China building a road through Doklam surely threatens that control.

A complete timeline of what happened in the recent Doklam Standoff 

On 16 June 2017, Chinese troops with construction vehicles and excavators began extending an existing road southward on the Doklam plateau, near India’s border. It was Bhutan which raised the alarm for India.

On 18 June 2017, India responded by sending around 270 Indian troops, with weapons and two bulldozers to evict the Chinese troops from Doklam.

On 29 June 2017, Bhutan protested against the construction of a road in the disputed territory.  According to the Bhutanese government, China attempted to extend a road in an area which is shared both Bhutan and India, along with China.

Between 30 June, 2017 and 5 July, 2017, China released multiple statements justifying their claim over the Doklam plateau. They cited reasons  as to why the Doklam standoff wasn’t really needed. And how China has not intruded into India’s territory to incite the standoff.

On 19th July, 2017, China asked India again to withrew its troops from the Doklam. On 24th July, 2017,  Chinese Foreign Minister Wang Yi, in his statement, asked India to withdraw and behave themselves to maintain peace.

India and China seem to never agree when it comes to their borders. BBC
India and China seem to never agree when it comes to their borders. BBC

Also Read : Why India Must Counter China’s High-Altitude Land Grab ?

What followed till 16th August, 2017 was China constantly alleging India of trying to create trouble. They accused India of trying to disturb the peace and not withdrawing the troops, even after repeated reminders. They also accused India of bullying.

India, however, kept quiet during the whole fiasco, only releasing a statement regarding their stand and position at the Doklam standoff.

On 28 August 2017, India and China finally announced that they had agreed to pull their troops back from the Doklam standoff. The withdrawal was completed on that very day.

On 7 September 2017, many media reports claimed that both nation’s troops have not left the site completely. They were still patrolling the area, simply having moved 150 meters awayfrom their previous position.

On 9 October 2017, China announced that it is ready to maintain peace with India at the frontiers. India reacted in affirmative, the peace was established when Indian Defence Minister, Nirmala Sitharaman’s visited Nathu La.

The issue between the two nations may rise again. Pixabay
The issue between the two nations may rise again. Pixabay

The Doklam issue for now is resolved. However, given the history of disputes between India and China, it won’t be a surprise if the issue resurfaces again in near future.