Today's Paper

Zero interest loans for women self-help groups

The idea is to promote women-oriented businesses, and introduce products with government branding and packaging  

Even as big businesses continue to default on payments, the Maharashtra government is reposing its faith in women-run self-help groups (WSHGs).

The State government has decided to make loans on projects run by an approximate 78,000 WSHGs interest-free. The move is likely to aid expansion of the WSHGs and enhance their capacity for entrepreneurial work. It is likely to benefit as many as 48,00,000 women working at WSHGs, officials said.

A proposal to increase the government’s share from the current 50 per cent of the interest towards loans to 100 per cent will be tabled at the next Cabinet meeting by Rural Development and Women and Child Development Minister Pankaja Munde.

As per the proposal, the repayment ratio of the WSHGs is high, therefore the interest-free loan scheme be extended to encourage women to become entrepreneurs and promote different projects in small scale industrial sector.

“If the SHGs are found to be paying their EMIs on time and the project is considered successful, the government has to, as per the proposal, bear their interest cost. This subsidy will be given only when the groups come for repayment,” said a senior government official. He added, “this is the natural selection of genuine and able groups.”

The government is expanding loans to SHGs that are meeting its ten-point criteria, but was traditionally directly subsidising in cash.

The announcement of interest free loan was first made by Ms. Munde and Chief Minister Devendra Fadnavis at Nagpur a few months back. “Big business have defaulted on repayment of bank and financial institution loans. On the other hand, the WSHGs have earned the impeccable reputation of paying the loans on time.”

The idea, in the long run, is to promote women-oriented businesses, and introduce these products with government branding and packaging, officials said.

“We are realising the potential of the products and with proper branding and packaging they could compete with the best in the business,” an official said.