RBI directs PSU banks to give loans to women groups at 7%
The central bank said women groups will be given an additional 3% subvention on prompt repayment of loan
Mumbai: The Reserve Bank of India (RBI) on Tuesday directed the public sector banks (PSBs) to provide credit to women self help groups (SHGs) at a rate of 7% per annum so as to get the benefit of interest subvention scheme under the Swarnajayanti Gram Swarozgar Yojana (SGSY)/Aajeevika scheme.
“PSBs will be subvented to the extent of difference between the weighted average interest charged and 7% subject to the maximum limit of 5.5%, for the FY14. This subvention will be available to all the PSBs on the condition that they make SHG credit available at 7% in the 150 districts," the RBI said in a notification.
Likewise, the regional rural banks (RRBs) will be subvented to the extent of difference between the lending rates and 7% for the FY14 on the condition they make SHG credit available at 7%, it added.
The SGSY scheme comes under the ministry of rural development which launched National Rural Livelihood Mission on 1 April 2013 to reduce poverty by building strong institutions of the poor, particularly women. It aims to enable these institutions to access a range of financial services and livelihoods services.
The RBI further said that SHGs will be given an additional 3% subvention on prompt repayment of loan.
For all loans up to Rs3 lakh, sanctioned to women SHGs on or after 1 December 2013, banks must charge an interest rate of 7%. However, for loans extended between 1 April 2013 and 30 November 2013, banks should convert the rate of interest to 7% for all the existing loan accounts of the SHGs with effect from 1 April 2013.
Banks should submit their claims on a half-yearly basis as on 30 September 2013 and 31 March 2014, RBI said.
While for additional subvention of 3%, banks may submit one-time consolidated claims during the entire year 2013-14 latest by 30 April 2014.
The RBI further said that the limit of subvention for the next financial year will be communicated separately. PTI
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