Emerging Trends in Priority

Sector Lending
Dr. Jignasa R. Savalia
CPIMR
 Self-Help Group
• SHG is group of people having similar
background voluntarily coming together to save
small amount regularly
• They are normally of micro entrepreneurs
• May be registered or unregistered
 Other Major Features
• Savings are deposited to a common fund and lent
to person in need
• Peer pressure for proper use of credit and timely
repayment thereof
• It runs on social and economical commonality
basis
• It helps to increase saving habits among poor and
needy people
• It reduces transaction cost for both lenders and
borrowers
 Aims and Objectives
• To evolve supplementary credit strategies for
meeting credit needs of the rural poor
• To build mutual trust and confidence between
rural poor and banks
• To encourage banking habits- both thrift as
well as credit
 Characteristics of SHGs
• Minimum 20 members can form a group
• The group should form a code to conduct to
bind themselves
• Internal savings mobilised by its members
from the core of the SHG and each member
must save a minimum of Rs. 5 per month
• The group decides the purpose for which the
loan is to be given
 Characteristics of SHGs
• It can be formed in cluster by reputed
voluntary agency/NGOs or branch manager of
local bank.
• The group should work in a democratic way.
• The group should be able to maintain some
simple basic records
• The group should be in active condition at least
six month prior to bank finance and they
should not be a defaulter to some other bank
• The group has to open a savings bank account
with bank from which it is getting finance
 Basics of selecting NGO/Voluntary
organisation
• NGO should have good track record
• It should have proper system of book keeping
and balance sheet
• It should have basic financial capabilities
• Ability to work with group of people belonging
to weaker sections of the society
 Procedure and quantum of loan
• There are two ways of availing bank loans
• One is directly to SHGs and the other through bank
lending to NGOs for group lending
• Generally the group will be lending to its members
• When the lending is directly from bank to group,
the same will have linkage with the savings
mobilised by the group
• A group is to normally prepare a credit plan for its
members and to submit it to the bank for availing
loans
• Upper limit of loan amount is Rs. 25000