स्वयं सहायता समूह – बैंक क्रेडिट लिंकेज

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SHG-BANK CREDIT LINKAGE

SHG-BANK Credit Linkage

Loans to Self Help Groups are purpose neutral loan. Banks shall embrace concept of Total Financial Inclusion and meet the entire credit requirements of the SHG members namely
a) income generation activities,
b) social needs like housing, education, marriage, etc., and
c) debt swapping.

Eligibility

  • The size of the SHG should be preferably between 10 to 20 members to enable effective individual participation in the group’s deliberations. However, in hilly tracks/ regions and tribal dominated areas, where communities are dispersed, the minimum size of SHG can be of 5 members. The SHG shall not consist of more than 20 persons. (Association or partnership consisting of more than 20 persons for the purpose of carrying on any business that has for its object the acquisition or gain by the said association or by the individual members thereof, requires registration under section 11(2) of the Company’s Act).
  • The group should have been in active existence for at least a period of six months. The group may be informal or formal (registered).
  • The group should have successfully undertaken savings and credit operations from its own resources.
  • Democratic working of the group wherein all members feel that they have a say should be evident. The group dynamics of working of the SHGs need neither be regulated nor formal structures imposed or insisted upon.
  • The group is maintaining proper accounts / records
  • The branch should be convinced that the group has not come into existence only for the sake of participation in the project and availing benefits there under. There should be a genuine need to help each other and work together among the members.
  • The SHG members should preferably have homogeneous background and interest.
  • The interest of the NGO or the SHPI concerned, if any, in the group is evident and the agency is helping the SHG by way of training and other support for skill up- gradation and proper functioning.
  • The SHG as well as SHPI / NGO should have a good track record in their functioning.
  • The defaults by a few members of SHG and/or their family members to the financing bank should not ordinarily come in the way of financing SHGs per se by banks, provided the SHG is not in default to it. However, the bank loan may not be utilized by the SHG for financing a defaulter member to the Bank.
  • SHG Members should not have multiple memberships in two or more SHGs.

Interest rate 

The banks would have the discretion to decide on the interest rates applicable to loans given to Self Help Groups/ member beneficiaries. Rate of interest to be charged on loans to SHGs is linked to base rate w.e.f 01.07.2010, vide our Circular No. RB-NF/MC&FI/BSJ/F-144/489 dated 21st February 2011 and presently linked to one-year MCLR w.e.f 01.04.2016. Effective interest rate on SHG loan is 3.60% above MCLR to be reset after one year and may increase or decrease subject to change in MCLR from time to time.


Margin

For Loans upto Rs. 10 lakhs

  • Primary- Clean/hypothecation (Since loans are utilised/disbursed with or without Micro Credit Plan an asset created are not quantified, hence it can be treated as purpose neutral loans)
  • Collateral – NIL No lien should be marked against savings account of SHGs, and no deposits should be insisted upon while sanctioning loans.

For Loans above Rs. 10 lakhs and up to Rs. 20 lakhs

  • Primary- Hypothecation of assets created out of bank finances.
  • Collateral – NIL Note: No collateral should be charged, and no lien should be marked against Bank Account of SHGs. However, the entire loan (irrespective of loan outstanding, even if it subsequently goes below Rs. 10.00 lakh) would be eligible for coverage under Credit Guarantee Fund for Micro Units (CGFMU).

FAQ

Ans. The Bank provides loans to SHGs for meeting entire credit requirements of the groups like income generation activities, social needs like housing, education, marriage, and debt swapping.

Ans. The Bank provides both Term Loans and Cash Credit limits to SHGs.

Ans. As per RBI circle no. FIDD.GSSD.CO.BC. No.09/09.01.003/2021-22 dated 09th Aug 2021, the collateral free loans to self Help Groups under DAY-NRLM has been increased from Rs. 10 lakhs to Rs.20 lakh. As per operational guidelines issued by NABARD, SHGs may be sanctioned savings linked loans by banks (varying from a saving to loan ratio of 1:1 to 1:4). However, in case of matured SHGs, loans may be given beyond the limit of four times the savings as per the discretion of the bank

Ans. No collateral and no margin would be charged up to ₹10.00 lakh limit to the SHGs. No lien should be marked against savings bank account of SHGs, and no deposits should be insisted upon while sanctioning loans.

Ans. Group Corpus includes amount of savings in Bank account of SHG, amount utilized for internal lending and cash Balance with SHG.


FINANCING SELF HELP GROUPS – PROMOTED UNDER DAY – NRLM SCHEME

Purpose: The loans may be used by members of SHGs for meeting social needs, high-cost debt swapping, construction or repair of house, construction of toilets and taking up sustainable livelihoods or to finance any viable common activity started by the SHGs.
Eligibility Criteria:
  • SHGs should be in active existence for at least 6 months as per their books of accounts (and not from the date of opening of S/B account).
  • SHGs should be practicing ‘Panchasutras’ i.e., regular meetings, regular savings, regular inter-loaning, timely repayment, and up-to-date books of accounts.
  • Women SHGs under DAY-NRLM should consist of 10-20 members. In case of special SHGs i.e., groups in the difficult areas, groups with disabled persons, and groups formed in remote tribal areas, this number may be a minimum of 5 members.
Loan Amount:
  • Minimum Loan Amount: Rs 1,50,000
  • Maximum Loan Amount: Rs 20,00,000
    Micro Credit Plan mandatory from Third dose Onwards
Type Of loan Account: May be as Term Loan OR as a Cash Credit
Security & Margin:
  • For loans to SHGs up to ₹10.00 lakh, no collateral, and no margin.
  • For loans to SHGs above ₹10 lakh and up to ₹20 lakh, no collateral obtained, and no lien marked against savings bank account of SHGs. However, the entire loan (irrespective of the loan outstanding, even if it subsequently goes below ₹10 lakh) would be eligible for coverage under Credit Guarantee Fund for Micro Units (CGFMU).
    For loan to SHGs above ₹10 lakh and up to ₹20 lakh, a margin not exceeding 10% of the loan amount exceeding ₹10 lakh may be obtained as per the bank’s approved loan policy.
Loan Documents:
  • Loan Documents as prescribed by IBA.
Charges: No loan processing fee/ Documentation Charges/Inspection charges for loans up to Rs. 5 Lakhs (Subject to revision from time to time)
Interest Subvention: Concessional Rate of Interest for all rural women SHGs under DAY-NRLM. (As per NRLM Scheme Guidelines)

FINANCING SELF HELP GROUPS – DIRECT LINKAGE TO SHGS

Purpose: The loan may be given for taking up sustainable livelihood activity and improving the quality of life through a micro credit plan developed by its members. The finance will provide thrift, credit, and other financial services to the poor in all areas enabling them to raise their income levels and standard of living.
Eligibility Criteria: Self Help Groups (SHGs)
Loan Amount:
  • Minimum Loan Amount: Rs 50,000
  • Maximum Loan Amount: Rs 20,00,000
    (Based on Micro Credit Plan )
Type Of loan Account: May be as Term Loan or as a Cash Credit
Security & Margin: For loan amount up to Rs. 10 Lakhs:
Primary- Clean/Hypothecation of assets created out of bank finances.
Collateral – NIL.
For loan amount above Rs. 10 lakhs up to Rs. 20 Lakhs:
Primary- Hypothecation of assets created out of bank finances.
Collateral- No collateral to be obtained, and no lien marked against savings bank account of SHGs. However, the entire loan (irrespective of the loan outstanding, even if it subsequently goes below ₹10 lakh) would be eligible for coverage under Credit Guarantee Fund for Micro Units (CGFMU).
Margin For loan to SHGs above ₹10 lakh and up to ₹20 lakh, a margin not exceeding 10% of the loan amount exceeding ₹10 lakh may be obtained as per the bank’s approved loan policy.
Loan Documents Loan Documents as prescribed by IBA.
Charges: No loan processing fee/ Documentation Charges/Inspection charges for loans up to Rs. 5 Lakhs.
Interest Rate:
  • Rate of interest to be charged on loans to SHGs is linked to one-year MCLR w.e.f 01.04.2016.
  • Effective interest rate on SHG loan is 3.60% above 1 Year MCLR
Repayment:
  • CC – Valid for 12 Months (review/renewal), Repayable on demand
  • TL - 3 to 7 Years.

Last Updated On : Friday, 19-01-2024

Interest Rates

8.50%* p.a. onwards

w.e.f. 05.04.2024

*T&C Apply.

 

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