MICROCAPITAL BRIEF: Government of Andhra Pradesh, India, Launches Cooperative Microfinance Bank for Self-Help Groups (SHGs)

Self-help groups [SHGs] in the Indian state of Andhra Pradesh will soon have an alternative source of microloans in the form of Stree Nidhi, a cooperative microfinance bank that has been formed by the state government and the Mandal Mahila Samkhyas [MMS], a representative federation of SHGs. SHGs are units of 10 to 20 individuals that pool their savings, apply for group loans and lend internally to their members. Stree Nidhi will mobilize deposits from SHGs and lend funds at an annual interest rate of 13 percent. The average loan size is expected to be INR 15,000 (USD 335) for a one-year term with monthly repayments [1]. The bank's first customers will be approximately 10 million female members of MMS, who were previously offered credit under the government's bank linkage program for SHGs. Stree Nidhi intends to disburse all loans via mobile phones and predicts that loan disbursements will be completed within 48 hours of applications that are approved [3]. Stree Nidhi has been established with INR 5 billion (USD 65 million) in share capital [1]. MicroCapital reported on the microfinance bank in May 2011, at which time it was suggested that...