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From tomorrow, poor women in Andhra Pradesh will be able to access micro credit within 48 hours after applying for a loan.
The rate of interest to be charged is 13 per cent, half of what is being charged by the microfinance institutions at present, thanks to a new microfinance ‘bank' labelled ‘Stree Nidhi'.
The ‘bank' – which will begin operations from Thursday – is actually an apex co-operative credit society formed as a joint venture between the Government of Andhra Pradesh and the Mandal Mahila Samkhyas (MMS) of self-help groups.
“The operations of ‘Stree Nidhi' will be handled completely with the aid of technology. Mobile banking-based transactions hold the key,'' Mr Reddy Subrahmanyam, Principal Secretary, Department of Rural Development, Government of Andhra Pradesh, told Business Line here.
The administrative costs would be limited to 10 per cent of the net return to make the loans cheaper.
As of now, four types of loans would be offered to women borrowers including funds to meet business requirements, education and health.
There is no water-tight criteria for sanctioning loans. The members of MMS, who are actually from among the same SHG community would do the due diligence and asses the need and repaying capacity.
The average size of loan is Rs 15,000 with a duration of one year in monthly repayment mode.
``They will be given a one per cent commission to do the due diligence, Including this and other costs, it is very much viable to extend loans at 13 per cent interest,'' Mr Subramnayam said.
The prompt repayment will make a big difference. If the repayments are on track, the borrowers will be eligible for a nominal three per cent interest on subsequent loans, he added.
The initial authorised capital is Rs 500 crore. “In the current financial year, Rs 1000 crore funds would be mobilised which will be increased to Rs 4,000 crore by 2014,'' the official said.
The objective of ‘Stree Nidhi' is to ‘lead by example' and to provide an alternative source of funds to the poor.
“The MFIs in the State would have to compete with us at low interest rates,'' Mr Subrahmanayam said.
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