MICROCAPITAL BRIEF: India’s Gujarat State Inks Microfinance Partnership With Large Industries, Self-Help Groups (SHGs)

The government of the Indian state of Gujarat has reportedly developed partnerships between self-help groups (SHGs), groups of individuals who are jointly responsible for the repayment of loans, with major industrial businesses, a strategy that it believes will encourage banks to offer loans to the groups at lower interest rates. According to the Times of India, the government of Gujarat has reportedly signed agreements with thirty-two industrial powerhouses, including Tata Motors, Fab India and Reliance Industries, that commit these businesses to creating a market for the products and services generated by members of the SHGs. An unnamed government official was quoted as saying, “Several nationalized banks have come forward to provide microloans to SHGs at the maximum interest rate of 11 per cent per annum.” Some of the industries to be included in the program, called Mission Mangalam, include animal husbandry, agro-processing, food processing and garment production.

By Julie Moksim, Research Associate

Sources and Additional Resources:

Times of India: “Govt’s Microfinance Model Promises to Empower Poor” by Rajiv Shah, April 22, 2011, http://articles.timesofindia.indiatimes.com/2011-04-22/surat/29463024_1_maximum-interest-rate-shgs-loan

MicroCapital.org Brief, January 14, 2011: International Finance Corporation (IFC) Proposes $10m Investment in Shree Mahila Self Employed Women’s Association (SEWA) Bank of Gujarat, India, for Microfinance, https://www.microcapital.org/microcapital-brief-international-finance-corporation-ifc-proposes-10m-investment-in-shree-mahila-self-employed-womens-association-sewa-bank-of-gujarat-india-for-microfinance/

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