What was propelled to grow as a support system for the economically backward section of the society in the remote pockets, today seems to be working against them.
With a belief that the poor are bankable and banking with them would be profitable, the Government, banks and NGOs helped in strengthening the support system through the Self Help Groups (SHGs) in the district for over seven years.
According to reports, women under Mission Shakti formed 16,545 SHGs and deposited Rs 13.65 crores and over 19,300 groups have been linked accessing Rs 111.94 crore to more than one lakh poor families by 2012-end. Nabard reports state that average credit usage per SHG is quite significant with more than ` 57,714.
The SHGs’ performance is reflected in their saving accounts and credit availability with 34 commercial bank branches, 25 regional rural bank branches (Odisha Gramya Bank) and six cooperative bank branches in eight blocks. But soon the situation changed. Increasing social acceptance increased the greed for money and it was the poor in the remote pockets who had to pay the heavy price.
These institutions had an upper hand over the banks and other financial institutions as they have better connectivity with the people at the grassroots level. Taking advantage of their accessibility, they started lending money to the poor at exorbitant rate of interest.
SHGs are credit-linked and repaying loans but their income generating activities are not monitored, admitted the ICDS officers who work as block-level federation coordinators.
“Many SHGs are lending money at the rate of 27 per cent interest per annum in different blocks. So they pay back bank loans easily in time, disclosed a president of an SHG on condition of anonymity. Chief Executive of District Supply and Marketing Society (DSMS), a unit of ORMAS, Nigam Das said, “Banks have disbursed Rs 6.81 crore to 582 new SHGs for internal lending and economic activities in February, 2013.”
Now competition is going on between SHGs and private micro financing institutions that lend money (external lending) to the poor and businessmen at exorbitant rate. For lending, ‘no dues clearance’ is not essential. So, reference and recommendation facilitate loans by the micro financing units and SHGs.
But, poor farmers are pushed to corner if they face crop failure which is a regular affair in the district. In that case, they are subjected to financial difficulty and mental pressure that has resulted in suicides.
In order to tide over the crisis, social activists called for the banks to operate as business facilitators and expand their network to rural areas. “However, efforts are on for economic empowerment of women and their social development in many fields,” said SN Mallick, AGM Nabard.
Lead district manager BP Tripathy said basic infrastructure is necessary to facilitate banking activities through business facilitators.