Key Provisions of SHG-Bank Linkage Programme
The Reserve Bank of India has outlined guidelines for the Self-Help Group (SHG)-Bank Linkage Programme, aiming to promote financial inclusion and credit access to SHGs.
Priority Sector: SHGs are recognized as a separate segment under priority sector lending, ensuring dedicated attention and resources.
Savings Bank Accounts: Banks are encouraged to open savings bank accounts for SHGs to facilitate easy transactions and credit flow.
Lending and Planning: SHG lending is to be integrated into the planning process, ensuring a structured approach to credit disbursement.
Margin and Security: Relaxed margin and security norms are applicable to SHG lending, making it more accessible and affordable.
Documentation: Simplified documentation procedures are in place to reduce the burden on SHGs and banks.
Defaulters: Banks are advised to take a pragmatic approach in dealing with defaulters within SHGs, focusing on recovery rather than penalization.
Capacity Building: Banks are encouraged to invest in capacity building and training for SHG members and bank staff to enhance the programme’s effectiveness.
Monitoring and Review: Regular monitoring and review of SHG lending are essential to identify areas for improvement and optimize the programme’s impact.
Encouraging Linkage: Banks are urged to promote SHG-bank linkage, fostering a collaborative environment for financial inclusion.
Interest Rates: Interest rates on SHG loans are to be reasonable and competitive, ensuring affordability for the beneficiaries.
Total Financial Inclusion: The programme aims to provide total financial inclusion and credit requirements to SHGs, addressing their diverse financial needs.
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