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VADDILENI RUNNALU- Loan Insurance Scheme

With a view to encouraging better repayment and to reduce the interest burden on the rural poor for the loans taken by Self Help Groups (SHGs) from banks and to improve profitability of SHG enterprises, this scheme was launched by AP government.

Objective of the Scheme:

  •  To protect the family members of an SHG member from financial risks, in the event of her death
  •  To safeguard the institution of SHG from repayment burden, when a borrowing members dies.
  • To ensure the perpetuality of the SHG,
  • Providing loan insurance to all the borrowing member,
  • To ensure 100% repayment at all levels even in the time of turbulence and to increase the size of loans to SHG members, by creating confidence among the Bankers.

Eligibility for implementation of scheme:

The following shall be the modalities for implementation of the Vaddi Leni Runalu (VLR) Scheme which will be operationalized for all SHG bank loans covering both urban and rural areas; and outstanding as well as new loans:

All SHGs both in rural and urban areas which have an outstanding Bank/Sthree Nidhi Credit Cooperative loan or raise a Bank/Sthree Nidhi loan are eligible for the interest subvention subject to the following:

i.    The loan amount shall not exceed Rs.5 lakhs in case of a term loan.

ii.    In case of cash credit system, the SHG shall repay at least 3% of the outstanding Principal amount each month.

iii.    Only the monthly repayments made within 7 days from the due date shall qualify for interest subvention for that month.

iv.    Eligibility will be verified on month-to-month basis.

v.    In case of overdue accounts, such SHGs have to clear the amount in excess of the scheduled outstanding.


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