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Lesson ID 241018
Version 02/27042020

SELF-HELP GROUP FINANCE

1. TARGET GROUP AND ELIGIBILITY:

Self Help Group –A group comprising of 10 -20 members which may be homogenous or
heterogenous. SHGs which
• Are in active existence at least for six months from the date of formation / opening of SB
account.
• Should be practicing Panchasutras –
▪ Regular Meetings
▪ Regular Savings
▪ Regular inter lending
▪ Timely repayment and
▪ Up to date books of accounts
• Qualify as per the grading of SHGs, are eligible for financing under the scheme.

2. PURPOSE:

First dose may be for Consumption, subsequent doses/ linkages more 75% of loan to be
utilised for economic activity.

3. FACILITIES AVAILABLE:

i. Cash Credit.
ii. Term Loan for projects.

4. QUANTUM OF FINANCE / ASSESSMENT:

i. First dose: 6 times of the existing corpus or minimum of Rs.1 lakh whichever is higher.
(If in a particular state the SLBC fixes the minimum loan amount higher than the limit
stipulated by RBI, the same may be adopted subject to approval by functional General
Manager at Corporate Office).
ii. Second dose: 8 times of the corpus at the time of review / enhancement or minimum
of Rs 2.00 lakh, whichever is higher.
iii. Third dose: Minimum of Rs. 3.00 lakh, based on the Micro credit plan prepared by
SHG and appraised by the Federations /Support agency and the previous credit
history.
iv. Fourth dose onwards: Minimum of Rs. 5.00 lakhs, based on the Micro credit plan
prepared by SHG and appraised by the Federations /Support agency and the
previous credit history subject to a maximum of Rs 35.00 lakh.

In respect of SHGs without any sponsoring Agency/SHGs of downgraded NGOs (‘B’ rated
NGOs) the maximum loan amount is Rs.10.00 lakhs. Credit linkage to these SHGs should be
referred to ZO for sanction by ZLCC/ZLSCC/KPK.
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5. MARGIN NORMS:

i. Upto Rs. 10 lakh: Nil

ii. Above Rs. 10 lakh: as per recent guidelines

6. REPAYMENT PERIOD:
Minimum 12 months and maximum 72 months depending on the activity for which the loan is
sanctioned.
In case of CCL, a minimum loan of Rs 5 lakhs to each eligible SHG for a period of 5 years with
a yearly drawing power (DP) is sanctioned. The drawing power may be enhanced annually
based on the repayment performance of the SHG.

7. RATE OF INTEREST:

i. For NRLM 250 Category I district

a. For loans Upto Rs 3.00 lakh: 7%.
b. For loans above Rs 3.00 lakh: 12.50%.

ii. Other than NRLM – Irrespective of the limit ROI @ 12.50% p.a (fixed)

8. PROCESSING FEE AND OTHER CHARGES:

i. Upto Rs 3 lakh: NIL

ii. Above Rs 3.00 lakh : Rs 500 + Rs 250 for every lakh or part there of exceeding Rs
3.00 lakh (Exclusive of GST)

All other charges: As per circular on service charges related to Agri advances issued from time
to time.

9. INTEREST COMPOUNDING / CAPITALISATION FREQUENCY:

i. SHG Agri - Half yearly

ii. SHG Allied and Non Agri – Monthly

10. SECURITY NORMS

i. Upto Rs 10.00 Lakhs: Nil

ii. For Microsate Branches upto Rs.15.00 lakhs : Nil

11. DOCUMENTATION:
i. Documents as per SOP of SHG Finance –
ii. Application in Annexure 1(a)
iii. Specimen copy of Resolution for taking loan from Bank in Annexure 1(b)
iv. Details of Member wise Loan Requirement (As per Micro Credit Plan) in Annexure
1(c)
v. Financial Statement of …….. (name of SHG) as on ……… (date) in Annexure 1(d)
vi. Acknowledgement in Annexure 1(e)
vii. Arrangement letter-cum-acknowledgement by the SHGs in Annexure 1(g)
viii. SHG Info Card in Annexure-3
ix. D-7 – Disposal of Proceeds Letter
x. D-102 - Articles of Loan Agreement for financing of Self-Help Groups
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xi. D-107 - Agreement for Backend subsidy

xii. F-159 - Copy of resolution regarding repayment of loan
xiii. F-160 - Loan disbursement/end use statement for advances to SHG
xiv. F-165 – Inter-se agreement executed by members of SHG
xv. D-2 – Joint and Several DPN
xvi. D-3 – Letter of Continuity
xvii. D-124 (additional requirement) - Deed of Accession (to be obtained when new
members join the Self-Help Group)
xviii. F-112 (additional requirement) - Letter from person who witnesses documents
executed by illiterate/blind person

12. AUDIT OF SHG BOOKS:

i. Audit of Books need not be insisted for Loans under NRLM / NULM.
ii. In other cases, before extending second dose the SHG are subject to audit.
iii. For SHG loans above Rs 10.00 lakh audit report from external auditors is mandatory.

13. REFERENCES:

Sl. Circular / Resources Date Description

No.
Main Sub
1 ADV- Rural lending- 19.03.2020 Master Circular on SHG – Bank
199/2019-20 42 Linkage Programme
2 ADV-10/2016- Rural lending- 04.04.2016 Master Circular on SHG – Bank
17 03 Linkage Programme
2 Manual of Instructions XVI March Documentation Manual
Documentation 2020 2020