SHGs to get bank loans at 7%:Ramesh

There is demand to reduce it further to 5 per cent and I would certainly support that,” Ramesh said.

At present,banks extend loans to SHGs under bank linkage programme at 12 per cent.

Ramesh was speaking at the fourth international summit on microfinance which began today.

The Minister said though microfinance has become a ‘dirty’ word,the MFIs are doing good job by bringing the required financial products to the doorsteps. But he also took a dig at them saying they should concentrate more on building social capital rather than trying to get foreign investments and improving balance sheets.

Referring to the Andhra Pradesh Government’s Microfinance Act,he said the microfinance sector has to be regulated and the act is aimed at regulating the sector and not to strangulate.

“We don’t want to strangulate the MFIs. We want to regulate them. That is the approach. MFIs should build up social capital. But the basic problem is MFIs are looking at balance sheets,share markets,and foreign investments,” the minister said adding MFIs should not look to poor as the business model.