Type of Facility

Cash Credit Limit (CCL) or Term Loan (TL) loan or Composite loan.

Finacle Scheme codes

CCSHG for Cash Credit limits

RA032 and RA029 for Term loans

Objective

To strengthen the SHG portfolio of the bank.

To enable Branches/offices to takeover SHG loans from other banks.

To enable SHGs to avail additional advantages like low rate of interest, waiver of processing charges up to Rs.10.00 lakh for CC/OD loans etc.

Purpose of Loan

To takeover of SHG account from other bank/Financial institution on selective basis with mutual consent with minimum satisfactory credit history of 12 months since availment of loan with existing FI.

Eligibility criteria/ Takeover Norms

To gain market share, branches may be permitted for takeover of SHG loans on selective basis immediately. However, FGMOs should pursue and explore all efforts entering into MOU/Tie-up with SRLM at the earliest possible time.

The maximum takeover amount per group shall be restricted to Rs.10.00 lakh.

No Branch shall attempt for takeover without written approval for takeover from respective RO/FGMO. As per loan policy 2021-22, it is mentioned that “the approval of takeover norms(Without deviation or with deviation) is to be obtained from next higher authority up to RLCC-I in all the cases of takeover proposal after the proposal sanctioned by the delegate but before release of such facilities and same shall be applicable in SHG takeover also.

SHGs which have availed at least 1^st dose of credit and completed the same successfully and eligible for 02^nd or subsequent dose of credit with minimum 12 months of satisfactory credit history for existing loan irrespective of dose of credit at another bank are only eligible for takeover. 

SHGs which have completed 18 months from date of formation as per books of record.

SHG should submit resolution for takeover of SHG loan with specific reason.

Obtention of NOObjection Certificate from existing bank is waived.

State Rural livelihood Mission-Jeevika (SRLM)/NABARD/Non-Governmental organization (NGO)/Village organization (VO) etc. shall recommend for the takeover of loan facility clearly citing the reason for takeover and they must confirm the veracity of the group.

Statement of account of the existing bank for preceding minimum 12 months is to be obtained and shall be verified to assess the quality of operations with the existing bankers. While scrutinizing the Bank statement, among other things, certain parameters to be looked into as stated below:

i. Cheque returns, if any

ii. Frequent cash withdrawals, if any;

iii.Frequent overdrawing / excess if any.

In case of adverse observation, if any, suitable justification should be provided

SHG groups shall be rated as per existing NABARD grading norms and only A and B ratedSHGs are eligible for credit linkage.

In lieu of credit report branches shall obtain the existing loan account statement and verify carefully whether repayment done properly or not, cheque bounce if any and ascertain the satisfactory repayment history of the group. In addition to this, Branches shall obtain recommendation letter for takeover from SRLM /NABADRD/NULM/NGOetc.

The account should have been a standard asset in the books of other bank/FI during the preceding minimum 12 months period.

Customer due diligence of all the members of SHG shall be undertaken by branch/office.

The NPA percentage under SHG portfolio of the Branch proposing for takeover should not be more than 2 % of outstanding of SHG loans.

SHGs are maintaining books of accounts like meeting register, saving register, loan register etc. scrutiny of same will be suffice for loan eligibility hence applicability of Financial ratios has been waived for SHG loans.

CIC check is to be mandatorily done for secretary and president/authorised signatory of SHG.

Loan account to be regular with previous Bank/ FI with no overdue.

Takeover norms to be applicable to SHG which have closed loan account with other bank and approached our bank/branch for new loan within a period of 03 months.

Sanction letter from previous Bank / FI to be obtained and held on records.

The term loan proposed to be taken over should not have been rephased by the existing Bank/Financial institutions barring Covid restructuring as per RBI guidelines.

Letter from Bank / FI for release of charge on security, if any to be obtained.

The SHG loans will be given for onward lending to individual members of group for economical/consumption purpose and there is no implementation of project hence this has been waived for SHG finance.

Apart from above all existing terms and condition applicable to SHG loans as per IC 1953-2020 dt.21.03.2020 and IC No.02591 -2021 dt.28.04.2021 and other circulars issued from time to time.

Quantum of Loan amount

The maximum takeover amount shall be restricted to Rs.10.00 lakh per group.

Cash Credit:-

Eligible loan amount to be arrived as per existing NRLM guidelines only on the basis of dose/linkage of credit and not on the basis of Age or date of formation of SHG.Previous credit linkage shall be considered for arriving the dose.

The loan as per DAY-NRLM guidelines shall be arrived as given below:-

• DP for Second Year: 8 times of the corpus at the time review/enhancement or minimum of ₹2 lakh, whichever is higher

• DP for Third Year: Minimum of ₹6 lakh based on the Micro credit plan prepared by SHG and appraised by the Federations /Support agency and the previous credit history.

• DP for Fourth Year onwards: Above ₹6 lakh, based on the Micro credit plan prepared by SHG and appraised by the Federations /Support agency and the previous credit History.

In case of Cash Credit/Overdraft loan, Minimum 12 month’s gap between two consecutive doses of credit shall be ensured so as to comply with NRLM guidelines.

For instance, if an account of SHG who has completed 10 months after availing 2nd dose of credit with the existing bank, shall be eligible for availing 3rd dose of credit after completion of 12 months from 2^nd linkage (i.e. After 2 months after takeover by our bank.)

The Branch may be permitted to sanction credit limit as per the eligibility of the group subject to a maximum of Rs.10.00 lakh under takeover which are eligible in terms of grading and maturity as per DAY-NRLM guidelines.

Term Loan:

The residual period should be in line with the original repayment schedule but however the remaining leftover period should be at least 12 months.

In case of Term Loan, the loan amount should not be more than outstanding balance.

Any further enhancement in loan amount should be in the form of Cash credit loan/Term loan as decided by borrowal groupas per existing NRLM guidelines.

Eligible loan amount to be calculated based on doses as mentioned for CC limits.

Security

For loans to SHGs up to Rs. 10.00lakh, no collateral and no margin will be charged.No lien should be marked against savings bank account of SHGs and no deposits should be insisted upon while sanctioning loans.

Sanctioning Authority

As per loan policy 2021-22, it is mentioned that “the approval of takeover norms(Without deviation or with deviation) is to be obtained from next higher authority up to RLCC-I in all the cases of takeover proposal after the proposal sanctioned by the delegate but before release of such facilities and same shall be applicable in SHG takeover also.

As per delegated lending authority upto a loan limit of Rs.6.00 lakh within which operating Drawing Power to be maintained as per DAY-NRLM guidelines.

For loan limit above Rs.6.00 lakh, next sanctioning authority within which operating Drawing Power to be maintained as per DAY-NRLM guidelines.

Any enhancement of drawing power after takeover as per DAY-NRLM guidelines shall be allowed at Branch level as per existing delegated lending powers as per eligibility of the group. 

The SHG loan account shall be processed through LAS module to ensure compliance of all sanction terms and conditions.

Rate of Interest

As applicable to SHG loans from time to time. Refer IC-02281 dt.27.10.2020 and circulars issued from time to time.

Margin

Nil

A/c labeling

Branches/offices shall label takeover account with TOSHG –Takeover of SHG loan label in Finacle to have proper MIS. The provision of account label is provided in SENT to CBS menu in LAS.

Interest Subvention

Women SHGs are eligible for interest subvention for a loan outstanding balance of Rs.3.00 lakh based on WAIC (Weighted Average Interest Charged).

Branch/RO to obtain details of subsidy availed/interest subvention availed/to be availed by group under DAY-NRLM/SRLM/DAY-NULM scheme etc.

SHG should submit the self-declaration to branch for obtaining the interest subvention from existing bank for eligible period till takeover to new loan account after takeover in coordination with agency implementing the interest subvention scheme.

From the date of takeover respective branch to claim subsidy for eligible accounts under DAY-NRLM/SRLM/DAY NULM or any other such scheme based on eligibility of SHG loan account.

Branch should provide new loan account to existing bank for crediting the eligible subsidy amount if any.

In case where previous interest subvention claim is pending with the existing/previous Bank, then the existing/ previous bank has to claim interest subvention amount for eligible period up to their association with SHG and with the help of SRLM, the subvention amount shall be transferred to the new operative account of SHG with our Bank duly coordinating with our Bank.

Repayment

Branch shall provide appropriate repayment period in negotiation with group which may vary from 03 to 7 years as per DAY-NRLM guidelines.

For CC limits interest shall be repaid as and when debited.

Loan to SHGs has to be repaid normally in regular monthly installment or as determined at the time of sanctioning the loan based on local practice, activities undertaken by SHG members.

Loans from SHG to members has to be repaid by members in appropriate installment which may be daily, weekly, market days, fortnightly/monthly etc based on the decision taken by the SHG.

Monitoring of takeover SHGs

Branches to monitor the performance of taken over SHGs loans and need to submit report on quarterly basis to Regional offices and if any adverse performance is observed in any of the Branch by RO, the takeover of loans for such branch shall be approved by Regional office.

FGMOs/ROs should review the performance of SHG takeover scheme quarterly basis and need to put note to concerned FGMO/RO head for information and action.

FGMO/RO to ensure that NPA under SHG portfolio should not be more than 2% of balance outstanding for any of the branch which have undertaken takeover of SHG loans.

Branches to attend the meeting of group at regular interval and ensure group dynamics/utilization of loan amount.

Documentation

As applicable to SHG loans.

Service Charges

As applicable to SHG loans.