Community Based Microfinance:A Study with Reference to Urban Women Self-Help Groups in Andhra Pradesh and Telangana

During the past decade, the SHG movement gained an impetus not only in rural area but also in the urban areas of India. As the Government of Andhra Pradesh (AP) realised that SHGs and its federations are the best tools for poverty reduction and empowerment of rural women-folk, it has started similar kind of programme in the urban areas known as Mission for Elimination of Poverty in Municipal Areas ( MEPMA). It has facilitated about 3 lakh self-help groups (SHGs) covering 32 lakh women in 189 municipalities and 19 municipal corporations in the undivided state of AP. About 80% of SHGs availed credit linkage with banks at least once since inception. Besides, SHGs disbursed loans to their members from group corpus as well as external credit sources - slum level federations (SLFs) and Sthree Nidhi Credit Cooperative Federation Ltd.

In this context, the present study is aimed to understand the microfinance activities of SHGs promoted in the urban areas of AP and Telangana state (TS). The study has covered 2,000 SHGs in 40 towns in 10 districts of AP and Telangana. The study finds that though there are some serious issues like (i) impounding of large funds in SHG SB accounts, (ii) poor credit linkages with slum level federations and Sthree Nidhi, (iii) distribution of member savings/ group funds and revolving fund and (iv) defaulting to banks. A large number of SHGs and SHG members have however benefited with microfinance services, especially savings and credit services.