SHGs will pay the principle amount while the government will bear the interest on their loans: Kiran

In a major initiative, the State government has announced its decision to provide interest free loans up to Rs. 5 lakh for women self-help groups covered under Indira Kranti Padham and Mission for Elimination of Poverty in Municipal Areas.

Seen as an extension of the ‘Pavala Vaddi’, three per cent interest being provided to SHGs for prompt repayment of loan instalments, the SHGs would be entitled to pay the principle amount while the government would bear the interest on their loans. “The SHGs can utilise funds accrued on account of interest waiver for more productive purposes and income generation activities,” Chief Minister N. Kiran Kumar Reddy said.

According to the existing interest rates, SHGs obtaining Rs. 5 lakh loan should pay Rs. 11,633 as monthly instalment. “Once the waiver is operational, they should pay only Rs. 8,333 and the government will contribute the remaining amount,” he said. The move would benefit close to 1.4 crore women members in the groups spread across the State.

The Chief Minister who participated in former Prime Minister late Rajiv Gandhi’s 68 birth anniversary celebration organised at Gandhi Bhavan on Monday said the State was leading in terms of loans provided to SHGs through bank linkages. While banks extended Rs. 26,000 crore as loans to SHGs across the country, the State’s share was close to Rs. 13,000 crore.

While the new scheme would help women achieve financial independence, the government was committed to empowering them politically. Accordingly, it was decided to give 50 per cent reservation to women in the elections to local bodies against the 33 per cent quota being extended to them now.