2. Definition
Self-help Groups (SHGs) are informal associations
of people below poverty line who come together for
mutual help, mutual benefit and mutual cooperation
for development of saving habit, Income generation,
social needs and debt swapping.
They are generally self-governed and peer-controlled.
It’s a village based financial committee usually composed of 10-
20 local women/men exception being hill, tribal, desert areas
where a min of 5-20 members is acceptable.
Generally all members are BPL but max of 30% can be from APL
but they are not eligible for subsidy.
3. Emergence of SHG In India
SHG traced in 1972 with the establishment of SEWA.
Ela Bhatt, who formed SEWA, organized poor and self-
employed women workers.
NABARD, in 1992, formed the SHG Bank Linkage Project,
which is today the world’s largest microfinance project.
From 1993 onwards, NABARD, along with the Reserve
Bank of India, allowed SHGs to open savings bank accounts
in bank.
The Swarn Jayanti Gram Swarozgar Yojana was introduced
in 1999 by GoI with the intention of promoting self-
employment in rural areas through formation and skilling
of such group.
Further evolved into the National Rural Livelihoods
Mission (NRLM) in 2011.
4. SHG-BLP
Self help Group- Bank Linkage Programme
Self Help Groups have the potential to bring together the
formal banking structure and the rural poor for mutual
benefit.
Studies conducted by NABARD in a few states to assess
the impact of the linkage project have brought out
encouraging and positive features like increase in loan
volume of the SHGs, definite shift in the loaning pattern
of the members from non-income generating activities to
production activities, nearly 100 per cent recovery
performance, significant reduction in the transaction
costs for both the banks and the borrowers etc., besides
leading to a gradual increase in the income level of the
SHG members.
5. SHG BLP
NABARD continues close coordination with all
stakeholders in SHG-BLP sector. Collaboration with NRLM
is being regularly maintained and enhanced for the support
of SHG-BLP.
Coordinated efforts like conduct of National level seminars
and workshops, mutual dialogues and capacity building of
stakeholders on SHG BLP have now become very regular.
Coordinated efforts in following areas have particularly
proved immensely fruitful.
Training of Trainers (TOT) programme
Conduct of Village Level Programmes (VLPs)
Smooth transition of WSHGs promoted in NRLM
intensive blocks to SRLMs
6. SHPI- Self Help Promoting Institutes
This programme is an attempt through Self Help Promoting
Institutes (SHPI) to work for promoting and enabling credit
linkage of these groups and also ensure loan repayment.
The NGO sector has played a prominent role of working as a
Self Help Group Promoting Institution (SHPI) by organizing,
nurturing and enabling credit linkage of SHGs with banks.
NABARD later co-opted many others as SHPIs including
the rural financial institutions (RRBs, DCCBs, PACS),
Farmers’ Clubs (FCs), SHG Federations, Individual Rural
Volunteers (IRVs) etc.
These stakeholders were encouraged to take up promotion
of SHGs by way of promotional grant assistance from
NABARD.
7. MEDP – Micro Enterprise development
Programme
NABARD since 2006 has been supporting need-based skill
development programmes (MEDPs) for matured SHGs
which already have access to finance from Banks.
MEDPs are on-location skill development training
programmes which attempt to bridge the skill deficits or
facilitate optimization of production activities already
pursued by the SHG members.
Grant is provided to eligible training institutions and SHPIs
to provide skill development training in farm/off-
farm/service sector activities leading to establishment of
micro enterprises either on individual basis or on group
basis
Over the years around 4.68 Lakh SHG members have been
covered through 16,406 MEDPs.
8. LEDP-Livelihood and Enterprise
Development Programmes
Livelihood and Enterprise Development Programmes
Skill upgradation trainings alone have limited impact on livelihood
creation among the SHG members.
To create sustainable livelihoods among SHG members and to
attain optimum benefit out of skill up gradation there is provision.
That provision is of intensive training for skill building, refresher
training, backward-forward linkages and handholding & escort
supports. It also encompasses the complete value chain and offers
end-to-end solution to the SHG members.
Implementation on a project basis covering 15 to 30 SHGs in a
cluster of contiguous villages.
9. DAY-NRLM
The Ministry of Rural Development, Government of India
launched a programme known as National Rural Livelihoods
Mission (NRLM) by restructuring and replacing the Swarn
jayanti Gram Swarozgar Yojana (SGSY) scheme with effect
from April 01, 2013.
DAY-NRLM is the flagship program of Govt. of India for
promoting poverty reduction through building strong institutions
of the poor, particularly women, and enabling these institutions
to access a range of financial services and livelihood services.
10. FINANCIAL ASSISTANCE:DAY-NRLM
Revolving Fund (RF): DAY-NRLM would provide Revolving Fund
(RF) support to SHGs in existence for a minimum period of 3/6
months and follow the norms of good SHGs, i.e. they follow
‘Panchasutra’ – regular meetings, regular savings, regular internal
lending, regular recoveries and maintenance of proper books of
accounts
Only such SHGs that have not received any RF earlier will be
provided with RF, as corpus, with a minimum of Rs10, 000 and up to
a maximum of Rs15,000 per SHG
No Capital Subsidy will be sanctioned to any SHG from the date of
implementation of DAY-NRLM.
11. NRLM Cntd……
Community Investment Support Fund (CIF) will be provided to the SHGs in the intensive blocks,
routed through the Village level/ Cluster level Federations, to be maintained in perpetuity by the
Federations. The CIF will be used, by the Federations, to advance loans to the SHGs and/or to
undertake the common/collective socio-economic activities.
DAY-NRLM has a provision for interest subvention, to cover the difference between the Lending
Rate of the banks and 7%, on all credit from the banks/ financial institutions availed by women SHGs,
for a maximum of ₹ 300,000/- per SHG. This will be available across the country in two ways:
(i) In 250 identified districts, banks will lend to the women SHGs @7% up to an aggregated loan
amount of Rs300,000/-.The SHGs will also get additional interest subvention of 3% on prompt
repayment, reducing the effective rate of interest to 4%.
(ii) In districts other than the above 250 districts, all women SHGs under DAY- NRLM will be
eligible for interest subvention to avail the loan facility at an interest rate of 7%. The funding for this
subvention will be provided to the State Rural Livelihoods Missions (SRLMs) from the allocation for
DAY- NRLM.
12. Role of Banks
Opening of Savings account of SHGs:KYC verification of only the
office bearers shall suffice for opening of savings bank account
Opening of Savings account of Federation of SHGs:Banks are
advised to open savings account of Federations of SHGs at village,
Gram Panchayat, Cluster or higher level. These accounts may be
categorized as savings account for ‘Association of persons’.
Transaction in Savings account of SHGs and Federation of
SHGs:To facilitate this, banks are advised to enable transactions in
jointly operated savings account of SHGs and their federations with
inter-operable facility
13. Lending Norms of SHG
Lending Norms:
(a)Eligibility Criteria:(i) Active existence at least since the last 6 months as per the
books of account of SHGs and not from the date of opening of S/B account
(ii) Practicing ‘Panchasutras’
(iii) Existing defunct SHGs are also eligible for credit if they are revived and continue to
be active for a minimum period of 3 months.
(b) Loan amount:(i) multiple doses of assistance under DAY- NRLM.
(ii) can avail either Term Loan or a Cash Credit Limit loan or both based on the need. In
case of need, additional loan can be sanctioned even though the previous loan is
outstanding.
14. CASH CREDIT LIMIT
DP(YEARW
ISE)
LIMIT
1ST 6 times of the existing corpus or minimum of Rs 1 lakh whichever is higher.
2ND 8 times of the corpus at the time review/ enhancement or minimum of Rs 2 lakh,
whichever is higher.
3RD 3 lakhs based on the Micro credit plan prepared by SHG and appraised by the
Federations /Support agency and the previous credit history.
4TH Minimum of ₹ 5 lakhs based on the Micro credit plan prepared by SHG and
appraised by the Federations /Support agency and the previous credit History
Banks are advised to sanction minimum loan of Rs 5 lakhs to each eligible
SHGs for a period of 5 years with a yearly drawing power (DP).
15. TERM LOAN
In case of Term Loan, banks are advised to sanction loan amount in doses as
mentioned below:
First Dose: 6 times of the existing corpus or minimum of Rs 1 lakh whichever is
higher.
Second Dose: 8 times of the existing corpus or minimum of Rs 2 lakh,
whichever is higher.
Third Dose: Minimum of Rs 3 lakhs based on the Micro credit plan prepared by
the SHGs and appraised by the Federations /Support agency and the previous
credit history.
Fourth Dose: Minimum of Rs 5 lakhs based on the Micro credit plan prepared
by the SHGs and appraised by the Federations /Support agency and the
previous credit History.
* (Corpus is inclusive of revolving funds, if any, received by that
SHG, its own savings, interest earning by SHG from on-lending
to its members, income from other sources, and funds from
other sources)
17. Purpose of loan and repayment
Purpose:
The loan amount will be distributed among members based on the Micro Credit Plan (MCP)
prepared by the SHGs.
In order to facilitate use of loans for augmenting livelihoods of SHG members, it is advised that
at least 50% of loans above Rs 2 lakhs and 75% of loans above Rs 4 lakhs be used primarily for
income generating productive purposes. Micro Credit Plan (MCP) prepared by SHGs would form
the basis for determining the purpose and usage of loans.
Repayment:
The First year/ first dose of loan will be repaid in 12-18 months in monthly/ quarterly
installments.
The Second year/ Second dose of loan will be repaid in 18-24 months in monthly/ quarterly
installments.
The Third year/ Third dose of loan will be repaid in 24-36 months in monthly/ quarterly
installments.
The loan from Fourth year/ Fourth dose onwards has to be repaid between 3-6 years based
on the cash flow in monthly/ quarterly installments.
18. Security and Margin
No collateral and no margin will be charged up to Rs10.00 lakhs 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.
19. Dealing with Defaulters
It is desirable that willful defaulters should not be financed under
DAY-NRLM.
At the stage of accessing bank loan by SHG for financing
economic activities by its members, the willful defaulters should
not have the benefit of such bank loan until the outstanding
loans are repaid.
Willful defaulters of the group should not get benefits under the
DAY-NRLM Scheme and the group may be financed excluding
such defaulters while documenting the loan.
20. Post credit follow-up
Loan pass books or statement of accounts in regional
languages may be issued to the SHGs
At the time of documentation and disbursement of loan, it is
advisable to clearly explain the terms and conditions as part of
financial literacy.
Bank branches may observe one fixed day in a fortnight to
enable the staff to go to the field and attend the meetings of the
SHGs and Federations to observe the operations of the SHGs
and keep a track of the regularity in the SHGs meetings and
performance.
