Master Circular on SHG-Bank Linkage Programme
The Reserve Bank of India (RBI) has issued a master circular on the Self-Help Group (SHG)-Bank Linkage Programme, which outlines guidelines for banks to promote financial inclusion and credit to SHGs.
The circular highlights the importance of treating SHGs as a separate segment under priority sector lending, and banks are encouraged to open savings bank accounts for SHGs.
SHG lending should be an integral part of the planning process, and banks should ensure that margin and security norms are relaxed for SHG loans. Documentation requirements should also be simplified.
The circular also emphasizes the need for capacity building and training for SHG members, as well as monitoring and review of SHG lending.
Banks are encouraged to promote SHG linkage and provide total financial inclusion and credit requirements to SHGs. Interest rates and service/processing charges should be reasonable and transparent.
The circular also addresses the issue of defaulters in SHGs and provides guidelines for banks to handle such cases.
The master circular consolidates 16 circulars issued by the RBI on the subject and provides a comprehensive guide for banks to implement the SHG-Bank Linkage Programme.
Chat with the Master Circular: