Loans at 25paise interest

INTEREST SUBSIDY

The Government of Andhra Pradesh introduced Pavalavaddi Scheme (Interest Subsidy) during the year 2004-05 with an objective to provide interest subsidy on the Bank loans taken by the Self Help Groups in Andhra Pradesh to reduce the financial burden on them. The Scheme is applicable to all loans extended by banks on or after 01.07.2004, under SHG Bank Linkage Programme

Need of the Scheme :

1 Self Help movement of women with thrift as entry point has grown as a mass movement in Andhra Pradesh. There are about 6.99 lakh women Self Help Groups covering nearly 89 lakh rural poor women in AP. The Government adopted mocro credit as a tool to attain the economic empowerment of women and facilitated SHG bank linkage programme in a big way since 1998-99 onwards in the State. The SHG women have taken up various income generating activities by availing themselves of the facility under the SHG - Bank Linkage programme and created a path for their economic empowerment. The Nationalized banks, Regional Rural Banks & Co-operative Banks are coming forward to issue loan to Self Help Gropus.

2. The Banks are giving loans under SHG Bank Linkage programme with different rates of interest ranging from 8% to 12%. The groups are facing difficulty in paying such rates of interest.

3. The reduce the financial burden on the Self Help Groups. The Government of Andhra Pradesh introduced the "Pavala Vaddi" scheme (Interes Subsidy) during the year 2004-05 with an objective to provide interest subsidy on the loans taken by Self Help Groups under this scheme.>

Process :

1. The DRDA will obtain the details of SHG repayment for the purpose of interest subsidy twice a year trhough the Mandal Samakhyas.

2. DRDA will calculate the Pavala Vaddi to be given to each SHG basing on the bank statement. The DRDA will give the Pavala Vaddi Cheques to the Mandal Samakhya along with the statement of particulars accruing to each SHG.

3. The Mandal Samakhya in turn will distribute the cheques to the SHGs through the Village Organisations inthe Presence of non officials.