Karnataka

Self-help groups use 60-70% of loans for personal, family purposes: Report

An evaluation of performance of SHGs on utilisation of loans availed at concessional rates from District Cooperative Central Banks, Primary Agricultural Cooperative Societies (PACS), and other banking sources in nine districts found increase in the number of defaulters over a period.

An evaluation of performance of SHGs on utilisation of loans availed at concessional rates from District Cooperative Central Banks, Primary Agricultural Cooperative Societies (PACS), and other banking sources in nine districts found increase in the number of defaulters over a period. | Photo Credit: REUTERS

Karnataka's Self-Help Groups (SHGs), which are formed for empowerment of women, spend 60%-70% of money borrowed as loans for personal/family purposes, said the latest report of the Karnataka Evaluation Authority (KEA), a State government entity.

An evaluation of performance of SHGs on utilisation of loans availed at concessional rates from District Cooperative Central Banks, Primary Agricultural Cooperative Societies (PACS), and other banking sources in nine districts found increase in the number of defaulters over a period.

Credit counselling

The KEA report (2022) said the State government or banks should establish credit counselling centres in districts for proper utilisation of funds by SHG members.

A total of 1,520 SHGs in Bidar, Koppal, Belagavi, Haveri, Tumakuru, Bengaluru rural, Kolar, Dakshina Kannada, and Chamarajanagar districts have been taken up for assessing their performance during 2014-2019.

It was found that the number SHG members who were defaulters of loan was 32.29% in 2015-16, 37.5% in 2016-17, 39.29% in 2017-18, and 10.71% in 2018-19.

The KEA report said SHGs borrowed loans for starting a new business in Belagavi (82%), Bidar (32%), and Kolar (48%). In Tumakuru, the main purpose of taking a loan was to expand a business (47%). Loans taken to meet some family expenses are highest in Bengaluru Rural (40%), Haveri (30%), Koppal (40%), and Dakshina Kannada (48%). Respondents in Chamarajanagar took loans to pay debts (80%), the report said.

A large number of SHGs undertake activities in dairy, production, and sale of readymade garments, marketing of blankets, marketing of agricultural seeds and manure, production and sale of papad, sambar powder, agarbathi, and production and sale of compost manure.

The Karnataka government has been actively promoting SHGs since 2000-01 with an objective to empower rural women and make them self-reliant by inculcating the habit of savings and proper use of financial resources. Anganwadi workers and supervisors are instrumental in organising rural women in SHGs. Currently, the loans can be directly sanctioned and disbursed through National Rural Livelihood Mission.

Increased self-confidence

On the plus side, the KEA report found that women's confidence has improved after joining SHG. Many members have reported starting business activity, which led to an increase in standard of living. Women members who were largely unemployed, working for daily wages, farmers, abd homemakers come together and form SHGs to become self-employed or have their own business after joining SHG.

The report recommended that loan amount for SHG members should be increased from ₹50,000 to ₹1,00,000, for enabling SHGs to undertake diversification of business.

An expert in microfinance said the government promoted SHGs are more likely to default their loans owing to use of loan amounts for marriages, purchase of household utensils, vehicles, repayment of loans borrowed from moneylenders, instead of asset creation or income generating activities.

Citing an example of SHGs promoted by Sri Kshetra Dharmasthala Rural Development Project (SKDRDP) headed by Dharmadhikari D. Veerendra Heggade, the expert said less than one per cent of SKDRDP promoted SHG members have reported default, owing to regular monitoring of work.


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Printable version | Jul 8, 2022 4:22:04 pm | https://www.thehindu.com/news/national/karnataka/self-help-groups-use-60-70-of-loans-for-personal-family-purposes-report/article65608546.ece