Key Provisions of the SHG-Bank Linkage Programme
The Reserve Bank of India’s Master Circular outlines the guidelines for the Self-Help Group (SHG)-Bank Linkage Programme.
Account Opening: Banks are required to open savings bank accounts for SHGs to facilitate their financial transactions.
Lending to SHGs: Banks are encouraged to lend to SHGs, considering their creditworthiness and repayment capacity.
Interest Rates and Charges: Interest rates and service/processing charges on SHG loans should be reasonable and transparent.
Priority Sector: SHG lending is classified as a separate segment under priority sector lending, with a focus on promoting financial inclusion.
Default Management: Banks should have a mechanism in place to manage defaulters within SHGs, ensuring that it does not affect the entire group.
Capacity Building: Banks are required to provide capacity-building programs and training to SHGs to enhance their financial literacy and management skills.
Monitoring and Review: Banks should regularly monitor and review their SHG lending activities to ensure effective implementation of the programme.
Reporting: Banks are required to report their SHG lending activities to the Central Information and Control Units (CICs).
The Master Circular also includes an appendix and a list of consolidated circulars for reference.
Chat with the Master Circular: