NEW DELHI: The ministry of rural development on Monday said it will shell out Rs 1,400 crore to provide subsidised loans to women self-help groups in rural India.

The nearly 3 per cent interest subvention given to women will be effective on loans of up to Rs 3 lakh taken after April 1, 2013. The decision, which is expected to benefit 3 crore women in 25 lakh selfhelp groups across the country, comes just ahead of the general elections due in April.

The move would benefit a large number of women SHGs in Odisha, Jharkhand, Uttar Pradesh, Madhya Pradesh, Bihar, Chhattisgarh and Andhra Pradesh. In the first phase, the Jairam Ramesh-led ministry will provide loans to women self-help groups at the rate of 7 per cent against over 10 per cent market rate in the 150 identified naxal-affected districts, making it at par with crop loans to farmers.

This would cost Rs 650 crore to the government and would be funded from the Rs 2,600-crore budgetary allocation to the ministry under the National Rural Livelihood Mission (NRLM). However, in the remaining districts across the country, the women self-help groups would be compensated through rebate which will cost the ministry another Rs 750 crore, taking the total outgo on subsidised loans to Rs 1,400 crore.

“This means that they would get loan at market rate only, but if they pay it back promptly, the difference in the amount between the market rate and subsidised rate will be credited to the account of women SHGs,” Ramesh said, adding that the rates would be further lowered to 4 per cent for SHGs who repay the loan on time.

According to Ramesh, the idea is to provide subsidised loans to all 640 districts in the next five years. “In 2012-13, 85 per cent of bank loans to SHGs were in four southern states – Andhra Pradesh, Tamil Nadu, Karnataka and Kerala. I have spoken to the finance minister and banks and hope that new states will be added to the list in 2014-15,” he said, adding that Bihar, West Bengal, Uttar Pradesh and Maharashtra are already picking up.

As per the ministry, banks had given Rs 21,000 crore as loans to SHGs in 2012-13. Of this, Bihar got Rs 222 crore, West Bengal (Rs 515 crore), UP (Rs 450 crore), Maharashtra (Rs 580 crore), MP (Rs 137 crore) and Gujarat (Rs 119 crore).

Under the National Ajeevika Mission, the ministry aims to raise the number of SHGs to 60 lakh in next five years enrolling 7 crore women as compared to 3 crore now. The ministry claims to have added 30 lakh women through 3 lakh new SHGs under NRLM in 2013-14.