Women Self Help Groups will be provided with low interest loans across the country under a central programme launched to absolutely eradicate poverty from the villages through women empowerment.
The Union Cabinet has approved the provision of interest subvention to Women Self Help Groups operating under National Rural Livelihood Mission (NRLM) which will allow women to avail loans up to Rs 3 lakh at an interest rate of 7 per cent per annum.
Mr. Jairam Ramesh, Rural Development Minister, giving details said that the initiative, in the first phase, would focus on 150 backward districts, including the 82 Integrated Action Plan districts, affected by Naxal menace.
"Today they are getting loans at 11.5 to 14 per cent rate of interest. In 150 districts, all women SHGs which are now getting bank loans at 11.5 to 14 per cent rate of interest will now get it at 7 per cent rate of interest," Mr. Jairam Ramesh said.
The women SHGs that repay loans timely will get additional three per cent subvention, reducing the effective rate to four per cent, the Rural Development Minister said.
In the 150 districts, Central government will bear the entire cost of the interest subvention from the market rate to seven percent.
In 392 districts, a majority in north India, women SHGs will get loans 7% rate of interest.
"Rural Development Ministry will bear its 75 per cent cost and states will bear 25 per cent. The cost involved is Rs 560 crore," Mr. Jairam Ramesh said.
Dealing with 81 districts in four South Indian states - Andhra Pradesh, Tamil Nadu, Karnataka and Kerala - separately, Mr. Ramesh said, "here also, Central government will bear 75 per cent cost and state governments will bear 25 per cent."
Mr. Ramesh added that a major chunk of bank lending for women SHGs goes to these four south Indian states.