A.V. Ragunathan and V. Venkatasubramanian

They will be encouraged to set up panchayat, block-level federations

  • On the strength of SHGs' credibility, NGOs have easy access to funding agencies
  • NGOs lend to SHG members at exorbitant rates

    CUDDALORE: The State Government has decided to wean away Self-Help Groups from Non-Governmental Organisations by encouraging them to set up panchayat-level federations (PLFs) and block-level federations (BLFs), which will carry out bank transactions on their own, according to an official source.

    The SHGs, which are a creation of the NGOs, have earned the goodwill of banks, financial institutions and government agencies through prompt repayment of advances. On the strength of the credibility of the SHGs, the NGOs seem to have easy access to funding agencies, the source says.

    Exploiting the situation, NGOs have turned into lending institutions, advancing micro-credit to SHG members at exorbitant rates of interest. In liaison with certain private banks, the NGOs get funds at 8 - 9 per cent interest and levy interest up to 34 per cent on SHG members.

    Attracted by financial benefits, the number of NGOs is constantly on the rise. Most of them are family-run enterprises.

    The source says transparency and accountability are rare among NGOs. They do not maintain proper accounts or allow auditing of accounts. Swapping of SHGs among NGOs is a common occurrence.

    A hyper active NGO will `purchase' SHGs for amounts ranging from Rs. 2,000 to Rs. 5,000 from their less active counterparts.

    In Kancheepuram, financial assistance in the form of seed money has been extended to 19 PLFs of women self-help groups to help them attain independent entity status.

    Hitherto, major socio-economic activities implemented by the Government using the women SHGs' network in rural areas were executed through promoters of the groups, mostly NGOs and quasi-government organisations.

    To create a direct link between women SHGs and the Government, PLFs were formed with three office-bearers elected from different groups functioning in the same panchayat. Rules were framed to ensure the PLF members act as a role model.