Banking and finance for Self-help groups:- One family, One Bank surging ahead with Bank of Maharashtra

Banking and finance for Self-help groups:- One family, One Bank surging ahead with Bank of Maharashtra

On a rainy day, I set out to Laule Village in Mulshi block of Pune district to attend a Bank loan disbursement camp organised by the Bank of Maharashtra. The onset of monsoons had added hues of green to the mounatins making them beautiful. Gurgling waterfalls in frothy white added to their charm.
My mind traversed to an equally interesting journey of Self help groups , SHGs as institutions.
SHGs have certainly moved forward as institutions and are being recognised as reputed entities of social change.
Almost 30 years ago, the need to organise the poor into community based organisations and linking them with banks was initiated by the National Bank for Agriculture and Rural Development (NABARD). This concept of Self-Help Group Bank Linkage Program (SBLP), had revolutionised the outlook of the country towards rural women. Banks started opening accounts in the name of women and they were channelised for creating sustainable livelihoods.
This initiative was strengthened further through DAY NRLM which has taken the SHG Bank linkage to new heights.
Self-help groups are now recognised as entities and entrepreneurs engaged n sustainable livelihoods and also promoting community development programs.
Social, financial and economic inclusion leading to sustainable livelihoods are the four pillars of DAY NRLM.
Slowly but surely Maharashtra has created a network of over 4 lakh SHGs in the state , reaching out to over 40 lakh households. However access to finance still remains a challenge. Till date , in Maharashtra, about 15 lakh households and SHGs have received loans amounting to over Rs. 5500 crores.
Yes, the SHG Bank linkage has gone up remarkably from about Rs.500 crores in 2016 to Rs. 1400 crores in 2018 yet compared to the southern states we still have a long way to go. The average size of loan and the timing is another major problem as also the delays in opening bank account of SHGs. Authentcation of documents of signatories has been another major problem
Great empathy and support has been created for SHGs at the topmost level in SLBCs however field level realities are different. It is often observed that SHG financing does not receive as much attention due to the small size of loans and the efforts needed for processing the same. In contrast processing larger loans in an appropriately filled application is perhaps easier for acheiving targets And so there is a tendency to neglect this sector.
Studies conducted by MSRLM have clearly indicated great improvement in helath, education, food security, savings , income and expenditure among the SHGs who have accessed finance and manage enterprises.
Therefore financing of SHGs can be a good catalyst in transforming society.
Of course, members being less educated have problems in maintaining accounts and face governance issues. These can be tackled through continuous capacity building.
Digitization of SHG platforms can also play a huge role in bringing in the much needed transparency and streamlining the process. Once understood digital banking will not only be easier but safer too.
MSRLM provides capacity building and institutional support to promote financial inclusion.
SHGs are not only trained regularly in financial inclusion but also monitored. The weekly meetings and the discussions on Dashasutri ensure that financial issues are discussed to enable them to understand its importance. Updation of records also helps them to build their strength. Therefore the SHG platform is the most suited to expand financial inclusion. It can also act as an intermediary to provide financial services in the community.
Bankers being overburdened with work , MSRLM has created a dedicated cadre of more than 4000 Bank Sakhis and Financial Literacy Community Resource persons FLCRPs to facilitate SHG bank linkage. In fact , there are directives to appoint one Banking Correspondent Sakhi, BC Sakhi, in each GP. This dedicated cadre will definitely help in bringing about a great change in rural banking.
While travelling to the camp organised by the Bank of Maharashtra I also remembered the MoU signed two years ago to facilitate SHG financing. The Bank of Maharashtra had made great strides in supporting SHG finance since then. So much so that it also received the national level award for the best bank in SHG credit linkage for the financial year 2018-19.
Cheques to the tune of Rs.1 crore were being distributed in the camp organised by BoM. These included 15 loans between Rs.1 lakh and Rs.10 lakhs for women SHGs amounting to Rs.45 lakhs. The remaining 25 were loans for agricultural finance.
The officials of the bank gave extremely good information on financial literacy, various insurance schemes like PMBSY, PMJJBY, Atal Pension, MUDRA loans and MSME loans to more than 200 people who had come for the programme.
The enthusiasm and eagerness of the Executive Director, BoM, Mr.Tamta and his team was extremely infectious. As we handed over the cheques to the groups of women it was wonderful to see their smiles and hope that all banks would steer up this enthusiasm.
Even today all banks were not as sympathetic and were unable to understand the needs of the SHGs. The attitude and regulations were individual based instead of being group based.
SHGs now needed a mix of finance. Some were still at the beginning stage while others were ready to accelerate to the next level of finance with bigger loans upto Rs.50 lakhs for bigger enterprises. Bankers needed to absorb this requirememt. The Reserve Bank also needed to consider amending its directives suitably. The simplest way would be by extending the SHG model of loan to Village organisations and Cluster level Federations. 
The concerns of NPA could  be suitably addressed taking into consideration
the fact that at the National level the percentage of NPA was below three per cent.
Maharashtra had been grappling with 10 % NPA but with the use of effective CBRM, community based recovery management and efforts by the respective teams it has been brought down to 8%
With schemes like Zero per cent rate of interest on regular repayment of loans it can become better.
SHG movement has therefore made great strides in the last decade and come a long way. SHGs have become a great force to reckon with. lt is high time banks also recognised their true potential and treated them with dignity.