SHG-BANK LINKAGE PROGRAMME (SHG-BLP)
- SHG-Bank Linkage Model continues to be the predominant model in the Indian Micro Finance context. Over the years, the SHG- Bank Linkage programme has emerged as a viable model for financial inclusion of hitherto unreached poor households particularly in rural areas.
Eligibility criteria for SHG-BLP
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Some of the basic characteristics for a SHG to be eligible for the Bank linkage are:-
- The SHG should be in active existence at least since last six months as per books of account of SHGs and not from the date of opening of SB account.
- The SHG should be practicing ‘Panchasutra’ i.e. regular meetings; regular savings; regular inter-loaning; timely repayment; and Up-to-date books of accounts.
- The SHGs should be democratic in its working, wherein all members feel that they have an equal say and it should be evident.
- The SHG should be in the habit of maintaining proper accounts and records.
- The SHG should not be in existence only for availing the benefits of loan and it should have genuine objective to help each other and to work together for the common benefits of its members.
- All the members of the SHG should preferably be from homogeneous background and interest.
- The SHG should qualify in the grading norm fixed by NABARD.
- The existing defunct SHGs are also eligible for credit if they are revived and continue to be active for a minimum period of 3 months.
Benefit to Bank and SHG Members out of SHG-BLP
- An effective rural credit delivery system.
- Group dynamics and peer pressure resulted in excellent recovery from SHGs.
- Ensuring better end – use of the loan
- Profitable proposition as 100% refinance is available from NABARD at cheaper rate.
- Simple loaning procedure and documentation.
- Pool of savings mobilized from rural poor.
- Fostering rural publicity that builds/improves bank image.
- Above all, the rural poor reposing confidence on the Bank.
Purpose of Loan/ limit
- Loan to be granted by the Bank to the SHG is purpose neutral as the group has the option to decide the purpose for which loan can be given to its members. As indicated in RBI Circular No RPCD. FID.BC.No.06/ 12.01.001/ 2011-12 dated 1st July 2011, the banks are expected to meet the entire credit requirements of SHG members for (a) income generation activities, (b) social needs like housing, education, marriage, etc., and (c) debt swapping, etc.
Amount of Loan/ Limit
- As per the operational guidelines of 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 of the savings on the discretion of the bank.
For further details visit nearest OGB Branch.