Minister of Rural Development and Panchayati Raj

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Interest subvention

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Interest subvention for the loans taken by women Self Help Groups, SHGs is an important initiative under Aajeevika-National Rural Livelihoods Mission (NRLM), a flagship programme of the Ministry of Rural Development, for empowerment and promotion of livelihoods of rural poor women. The interest subvention component was approved by Govt. of India in May, 2013, and is applicable for loans availed by women S.H.G s from 1st April 2013.

The operational Guidelines were issued by R.B.I and N.A.B.A.R.D in November, 2013 and subsequently the Ministry has completed all the preparations, in coordination with the Ministry of Finance, for implementing the scheme. Instructions have been issued to all Public Sector Banks, RRBs and Co operative banks for implementation of the Scheme.

Accordingly, from 1st Feb 2014, all Banks (PSBs, RRBs, Cooperative Banks and Private Banks) will lend to all the women SHGs at upfront 7% interest(for loans upto Rs. 3 lakhs) in 150 selected backward districts (details in Annexure). These SHGs will get a further 3% subvention on prompt repayment, thus the effective charge on all such loans will be 4% only. In addition, all women SHGs with outstanding loans (from 1st April 2013 onwards for loans upto Rs. 3 lakhs) will pay interest only at 7% from February 1st amount for the period 1st April 2013 to 31st . They will be reimbursed the differential interest January, 2014.

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