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| FINANCING SELF HELP GROUPS (SHGS) |
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| What is Self Help Group(SHG) |
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Self Help Group is a homogeneous group of micro entrepreneurs with affinity among themselves, voluntarily formed to save whatever amount they can conveniently save out of their earnings and mutually agree to contribute to a common fund of the group from which small loans are given to the members for meeting their productive and emergent credit needs at such rate of interest, period of loan and other terms as the group may decide.
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| Objective: |
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- To meet the credit needs of the poor by combining flexibility, sensitivity and responsiveness of the informal credit system with the strength of technical and administrative capabilities and financial resources of the formal credit institutions.
- To build mutual trust and confidence between the bankers and the rural poor.
- To encourage banking activity both on thrift as well as credit side in a segment of the population that the formal financial institutions usually find difficult to cover.
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| Eligibility: |
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The group should
- Be in active existence for at least a period of six months.
- Have successfully undertaken savings and credit operations from its own resources.
- Maintain proper accounts/records.
- Work democratically wherein all members feel that they have a say should be evident.
- Be formed to reflect genuine need to help each other and work together and Branch Manager 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.
- Have members preferably with homogenous background and interests.
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| Linkage Programme: |
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There are two ways of extending bank finance.
- Direct to SHG or
- Through bulk lending to VAs/NGOs for on-lending to Group.
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| Extent of Credit |
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| The acceptable proportion of savings to the loan could vary from 1:1 to 1:4 depending on the assessment of the SHG by the Bank. |
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| Rate of Interest & Processing Charges: |
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Please click here to know our latest rate of interest
Please click here to know our latest processing charges |
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| Security: |
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Hypothecation of assets created out of Bank's finance.
No insistence on collateral security |
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| Security Documents: |
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- Inter se Agreement by all members.
- Articles of Agreement by authorized members.
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| Repayment |
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Bank prescribes appropriate repayment period in negotiation with the Group which may range from 3 to 7 years.
Repayment may normally be in regular monthly installments or as determined at the time of loaning based on local conditions, activities undertaken by members etc.
Loans from SHGs to members could be repaid in appropriate installments which may be daily, weekly or market days fortnightly, monthly etc. |
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| What are the books and registers needed by a SHG to avail of bank loan? |
Following registers are required to maintain by any SHG
- Attendance Register
- Membership Register
- Proceedings Book
- Savings Register
- Bank Borrowing/Deposit Register
- Credit Register.
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| What are the characteristics of a SHG being entertained by Bank for loan? |
- Membership of a Group may be generally 10 to 20.
- Group may be registered or unregistered. However, registration is required for SHGs having more than 20 members.
- Group should devise a code of conduct /bylaws to bind themselves.
- Internal savings mobilized by members is the core of SHG concept and group to decide the amount to be saved, its periodicity and the purposes for which loan can be given to members.
- Group to decide the rate of interest to be paid/charged on savings/credit to members.
- Group should function in a democratic way allowing free exchange of views and participation by members.
- Group should maintain simple basic records such as Minute Book, Membership Register, Saving and Credit Registers.
- Group to open a Savings Bank Account with the bank.
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