Concept

• Joint Liability Group (JLG) is an informal group comprising preferably of 4 to 10 individuals for the purposes of availing bank loan either individually or through the group mechanism against mutual guarantee.
• Mostly engaged in similar type of economic activity in Farm or Non-Farm sector and offer a joint undertaking to the Bank that enables them to avail loans.

Objective

• To augment flow of credit to farmers, especially small, marginal, tenant farmers, oral lessees, sharecroppers /individuals taking up farm activities
• To extend collateral free loans to tenant farmers through JLG mechanism.

Who can form JLG

Business Facilitators, NGOs, Farmers' Cubs, Farmers Associations, Panchayat Raj Institutions (PRIs), KrishiVikasKendras (KVKs), State Agriculture Universities (SAUs), Agriculture Technology Management Agency (ATMA), Bank Branches, PACS, Other Co-operatives, Government Departments, Individuals, Input dealers, MFIs / MFOs, JLPI etc.

Type of loan

Cash credit, short-term loan or term loan depending upon the purpose and tenor of loan.

Loan Limit

As loan to be granted is against the mutual guarantee offered by the group, maximum amount of loan may be restricted to Rs.1.00 lac per individual without margin / security for agricultural loans and up to Rs.50000/- per borrower for composite loans.

Margin

• Up to Rs.1.60 lakh-Nil
• Above Rs.1.60 lakh: Minimum 10%.

Security norms

• Hypothecation of assets financed
• Mutual guarantee of the JLG members.
• No Collateral Security

Others

• PAIS and Crop insurance as per extant guidelines.

Forms & Documents

• Documents as suggested by NABARD/RBI to be taken:

Model A:
Introduction form
Application cum appraisal form
Letter of Guarantee
Joint liability guarantee
Appropriate DPN Note
Letter of continuity
Hypothecation of asset financed
Mortgage deed
Letter of general lien and setoff
CIBIL-undertaking letter from borrower
/guarantors any other document stipulated in sanction.

Model B: Document as applicable to SHGs is to be obtained.