Financing women entrepreneurs by RMK (Rashtriya Mahila Kosh) for sustainable development.
This paper highlights the RMK is to facilitate credit support or micro-credit support to the poor women for income generating, production, skill development and housing activities in order to make them economically independent. The RMK mainly channelizes its support through Non-governmental organizations, Women Development Corporations, Cooperative Societies, Self Help Groups formed under Swayamsidha or Swa-shakti etc.

Non-governmental organizations (Services)
Bank loans (Usage)
Working women (Finance)
Chaitanya, Krishna
Pub Date:
Name: International Journal of Business Research Publisher: International Academy of Business and Economics Audience: Academic Format: Magazine/Journal Subject: Business, international Copyright: COPYRIGHT 2009 International Academy of Business and Economics ISSN: 1555-1296
Date: March, 2009 Source Volume: 9 Source Issue: 2
Event Code: 360 Services information; 250 Financial management Computer Subject: Company financing
Geographic Scope: United States Geographic Code: 1USA United States
Accession Number:
Full Text:

Today, more than one million SHGs have been credit linked across the country and they are able to mobilize about Rs.3000 crores as credit from the formal financial institutions. This means with an average 15 per SHG a crore and fifty lakh people, mostly Women are now organized as SHGs. The average size of the loan today is very low at Rs.2000/-, but the potential is very large.

Of late, there is a paradigm shift in the rural credit delivery system in India. Self-help Groups (SHGs) especially of Women are emerging in different parts of the country as grassroots mechanism to provide credit out of group funds. The money saved by the members are pooled and used as a revolving fund to provide credit for consumption and production purposes. Loans are advanced to the members based on priority determined by the group. There is no denying the fact that micro finance that helps borrowers is necessary but not a sufficient condition for micro enterprises promotion. Other inputs are required especially in a marked-led approach for sustainable development of micro enterprise. Several small entrepreneurs fail to achieve sustainable projects because a major share of their project funds are diverted to debt servicing. In this context, management of group funds by the poor especially Women providing sustainable livelihood opportunities through micro enterprise development becomes important.

Experience in many countries demonstrates that poor women make investments wisely and earn returns. However, the flow of financial assistance to them was too marginal, if at all, to enable them to cross the poverty line. The need to create grassroots organizational to enable women to come together, to analyze their issues and problems themselves, and to fulfill their needs was strongly advocated. In fact, experience shows that some of the successful 'group-based participatory programmes' have made significant improvement in the conditions of living poor women. In India, major funding agencies for micro-credit programmes have been NABARD, Rastriya Mahila Kosh (RMK) and Nationalized Banks. The most prominent National level micro-finance apex organization providing micro-finance services for women in India is the National credit fund for women or the Rastriya Mahila Kosh (RMK). The present paper made an attempt on the role of RMK in Financing Rural Micro Women Entrepreneurs for sustainable development.

About Rashtriya Mahila Kosh

Rashtriya Mahila Kosh (National Credit Fund for Women) was established in the year 1993, under the Ministry of Women and Child Development, Government of India. RMK has completed its 13th year of operation. It was started with an initial corpus of Rs.31 crores. This corpus since has been recycled four times to reach cumulative loaning operation of Rs.178 crores.


The main objectives of RMK is to facilitate credit support or micro-credit support to the poor women for income generating, production, skill development and housing activities in order to make them economically independent. The RMK mainly channelizes its support through Non-governmental organizations, Women Development Corporations, Cooperative Societies, Self Help Groups formed under Swayamsidha or Swa-shakti etc.


Loan Promotion Scheme:

RMK provides smaller loan assistance, maximum up to Rs.5 lakhs to newer and smaller but potentially capable organizations having at least six months experience, in formation of Self Help Groups, thrift, credit, and recovery management. The objective is to further upgrade and promote their confidence in handling thrift and credit programmes more effectively.

Main Loan Scheme:

The scheme aims at providing credit to poor women for income generation activities through experienced NGOs. Organizations having minimum 3 years experience in formation of Self Help Group, thrift, credit, and recovery management are eligible to apply under this scheme. A maximum loan up to Rs. 300 lakhs--(Rs. 100 lakhs per state) can be granted at a time under this scheme.

Revolving Fund Scheme:

Organizations having five years experience in the field of micro-credit with satisfactory record of accomplishment are considered under this scheme. A maximum limit of Rs. 5 crores can be given as loan, and the organizations are encouraged to further recycle the principal amount sanctioned by RMK for income generation activities among the SHGs.

Franchisee Scheme:

This is an outreach scheme to enable spread of RMKs programmes through out the country, especially backward areas. Responsible organizations having good record of accomplishment and experience in the field of micro-credit and franchises undertake the programme. Smaller NGOs of any state can avail loan directly from franchisee appointed by RMK for that state without sending their proposal to RMK office in New Delhi. The maximum credit available under the scheme is Rs. 500 lakhs.

Gold Credit Pass Book Scheme:

An innovative credit delivery mechanism, these schemes provides hassle-free finance to medium and large NGOs to revolve the fund sanctioned by lending to SHGs for income generation production and consumption needs in a feasible manner. The maximum credit limit is Rs. 500 lakhs.

Housing Loan Scheme:

This scheme has been designed with a view to provide shelter to self-help group members through implementing agencies. The maximum credit limit is Rs. 50 thousand per beneficiary for construction of low cost house/repairs/renovation. The loan is repayable within sixty months.

Family Loan Scheme:

This scheme is recently launched by RMK to help free poor women from the depth trap of moneylenders for loans to meet their family expenditure such as medical, marriage, education, funeral, festivals and other emergency needs.

Refinance Scheme:

RMK provides 100% refinance assistance to Women Urban Co-operative Banks on funds provided by them to poor women either directly or through SHGs within the norms of the RMK Main Loan Scheme.

Repeat Loan:

Repeat Loan is also made available to organizations on successful utilization of first loan and the eligibility criteria is that the borrowing organization has to repay 25% of its existing loan.


Since its inception on 30th March 1993, the achievements of RMK up to 31st May 2006 are as under. The RMK has achieved a phenomenal growth during the last 13 years. A perusal of the table reveals that during the inaugural year of RMK i.e. 1993-94, about 141 lakhs were disbursed to women beneficiaries. As on 31st May 2006, the total loan amount of Rs. 14987.72 lakhs was disbursed. Thus during the period of 1993 and 2006, there was a 106 fold increase in loan disbursement to women beneficiaries. As on 31st May 2006. 1306 NGOs were assisted by RMK and most of the NGOs were found situated in Andhra Pradesh and Tamilnadu states. Out of the total disbursed amount by RMK, large chunk of amount was disbursed in Andhra Pradesh state (36.72%) and Tamlinadu state (20.47%). In the course of last one decade RMK has not only proved to be a successful scheme for taking the message of micro credit to various parts of the country but has also proved to be a major ventures in terms of efforts in poverty alleviation coupled with cost effectiveness.


The wide spectrum of emerging models of SHG-based institutions reflects the effort of NGOs and other stakeholders in addressing the challenge of sustainability. The multiple constraints and opportunities that determine the types of institutions promoted include: (i) the legal and regulatory provisions in the states of operation; (ii) the origins of the programmes and the broader vision for the community; (iii) the capacity of the NGO to support microfinance; (iv) poverty contexts and social conditions in different areas; (V) the availability of the physical and financial infrastructure and external support. RMK has a strategic vision to expand its program uniformly all over the country to empower more and more economically poor women of the country in a phased manner.


1. Adams, Dale W and Pischke, J.D. Von, "Microenterprise credit programs", World Development, 20(10), 1992 (October), 1463-1470.

2. Chatterjee, Shankar, "Empowering women's through micro finance: A study", Women's Link, 10(3), 2004(July-Sept): 15-21.

3. Kotaiah.P, "Banking on micro entrepreneurs-Innovative lending and credit programmes", National Bank News Review, 13(2), 1997(April-June): 7-15.

4. Kumar, Udaia, "Branding micro finance",Shelter,17(1),2004(January): 32-34.

5. Malyadri.P, "Financing Rural Non-Farm Sector", Khadi Gramodyog, May 1997, Vol.43 No.8, 442-448.

6. Yunus Mohammad, "Grammeen Bank Micro-credit and millennium development goals", Economic and political weekly September 4, 2004; 4077-4080.

Krishna Chaitanya, S. L Degree College, Narayanpet, Andhra Pradesh, India
Table-1: Year wise progress of RMK since its inception (1993-2006)

Year          Loan         Loan            No. of NGOs /
              Sanctioned   Disbursed       No. of Others

1993-1994     439.33       140.82          24
1994-1995     512.45       429.53          28
1995-1996     861.66       563.83          48
1996-1997     1700.55      916.76          70
1997-1998     1271.40      1395.39         85
1998-1999     1484.62      1141.50         133
1999-2000     1958.75      1384.64         324
2000-2001     2118.50      1675.80         151
2001-2002     739.11       633.76          154
2002-2003     1600.23      1058.37         89
2003-2004     2505.60      1446.07         69
2004-2005     1549.74      1886.87         40
2005-2006     1930.90      2068.42         82
2006-2007     42.00        234.15          9
  (up to
TOTAL         18714.84     14987.72        1306

Year          No. of       No. of Women
              SHGs         beneficiaries

1993-1994     3707         37066
1994-1995     2506         25059
1995-1996     3750         37502
1996-1997     9106         91064
1997-1998     5962         59621
1998-1999     5198         51982
1999-2000     5809         58089
2000-2001     4656         46559
2001-2002     1618         16183
2002-2003     4430         44290
2003-2004     3637         36371
2004-2005     2232         22321
2005-2006     2730         27305
2006-2007     93           930
  (up to
TOTAL         55434        554342

Source: Annual Report 2005-06, Department of Women And
Child Welfare, Government of India, New Delhi

Figure-1: Details of state wise position of RMK assistance as
on 31st May 2006

Andhra Pradesh        36.72%
Tamil Nadu            20.47%
Maharashtra            4.92%
W.B.                   5.26%
Kerala                 3.96%
M.P.                   4.27%
U.P.                   3.60%
Orissa                 5.22%
Bihar, Delhi, H.P.,   11.82%
Gujarat, Rajasthan,
NE States              1.62%
Others                 2.15%

Source: Annual Report 2005-06 Rastriya Mahila Kosh, New Delhi

Note: Table made from pie chart.
Gale Copyright:
Copyright 2009 Gale, Cengage Learning. All rights reserved.