The Hindu Business Line : Microcredit lending to SHGs touches Rs 150 crore

Mr Ashok Mirza, Managing Director, Dax Networks (right); Dr K.M. Thiagarajan, Chairman, Microcredit Foundation of India; Mr R. Ramaraj, Managing Director, Sify Ltd; and Mr R. Subrahmanian, Advisor, ICRA, at a press conference in Chennai on Thursday. — Shaju John

Chennai , March 10

MICROCREDIT Foundation of India's (MFI) disbursements to self-help groups have touched the Rs 150-crore mark in one year, the Foundation's Chairman, Dr K.M. Thiagarajan, told a press conference here on Thursday.

The non-profit organisation that works in association with the ICICI Bank has extended loans to around 9,000 self-help groups in villages and small towns.

It was on March 9, 2004, that the tie-up between MFI and the bank was formalised. Under the tie-up, MFI would identify and lend to self-help groups and a year after, the good loans would be taken over by the bank.

Dr Thiagarajan said that the rate of interest on the micro loans was rather high at about 18 per cent. He said that the rates ought to and would come down.

When it was pointed out that the borrowers would otherwise access funds at much higher rates, sometimes even up to 60 per cent, he said, "That is still not a good argument for keeping the rates as high as 18 per cent."

Dr Thiagarajan, who was the Chairman of Bank of Madura until it got merged with the ICICI Bank in 2001, said that the Bank of Madura had pioneered the concept of micro credit years ago. After the ICICI Bank took it over, the programme was continued. He said that the target before the organisation was Rs 1,250 crore for 97,000 groups, to be achieved by March 2008.

In India, some 40 crore people, in six-odd million villages, are waiting for small loans. Only about two crore of them have been served so far, by the organised financial sector.

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