60-70% women diverted SHG loans in Karnataka: Study

BENGALURU: About 60-70% of women who were given business loans at concessional rates through Self-Help Groups (SHGs) during 2014-2019 diverted the money for personal or family purposes owing to penury, a recent study by Karnataka Evaluation Authority (KEA) has found.
The study was carried out by KEA — an official agency that evaluates the state government's development policies and programmes — to understand the pattern of utilisation of loans availed by SHGs from cooperative institutions between 2014 and 2019. The women were given loans up to Rs 50,000 each through self-help groups by district co-operative banks.

Analysing factors pre- and post-loan sanction, the study found that a large chunk of women had misused the funds but there was a substantial improvement in their lifestyle and the economic position of their families. However, the study found that the diversion of these funds for family activities put women in a better position. Many women reported that their family financial condition had improved, besides they had begun donning the decision-making role within their families.
According to the study published a few days ago, a total of 1,520 SHGs were chosen from nine districts of Karnataka, including Bengaluru Rural. The report said that so far about 90,000-plus SHGs have been credit-linked and provided with financial assistance to the extent of Rs 496 crore.
"About 60-70% of the money taken from SHGs as loans is being misused for personal or family purposes. Even though all women had borrowed the money with an intention of starting a business, eventually they ended up spending on domestic requirements," the report said.
There have been exceptions, though. In Bengaluru Rural, for example, only 30% of the women wanted to start a new business, while 40% revealed they wanted to meet family expenses. However, many of the 30% women who were keen on using the loans for business ended up spending it on family needs, the study found.
"Poverty is an important factor that poses a challenge in realising women's empowerment. Lack of awareness about legal and constitutional provisions and failure in realising it are the other factors that hindered the process of empowerment," the report said.
The report has recommended the state government to set up credit counseling centres in every district to create awareness among women, besides adopting a mechanism to train the members in utilising the loans on livelihood creation activities only and also check if the same is being done. The report recommended the government to increase the extent of loan from the current Rs 50,000 to Rs 1 lakh and disburse it through the National Rural Livelihood Mission. Currently, only DCC banks are sanctioning the loans.
The market test
Several women who borrowed loans through SHGs and started new businesses had a tough time in finding a suitable market for their products. Some of the business activities in which women invested included the sale of readymade garments, blankets, agriculture seeds and manure, and making papads, sambar powder and pickles. In Bengaluru Rural alone, 50% of the women entrepreneurs assisted by SHGs took one year to be able to sell their products