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 consolidates existing guidelines and instructions on the subject.
The SHG-Bank Linkage Programme is a separate segment under the priority sector, aiming to promote financial inclusion and credit requirements of SHGs.
Key features of the programme include:
- Opening of Savings Bank Accounts: SHGs are required to open savings bank accounts with banks to facilitate credit flow.
- SHG Lending: SHG lending should be an integral part of the planning process, with banks encouraged to lend to SHGs.
- Margin and Security Norms: Relaxation of margin and security norms for SHG lending, with a focus on collateral-free lending.
- Documentation: Simplified documentation procedures for SHG lending.
- Presence of Defaulters: Banks should not deny credit to SHGs solely based on the presence of defaulters in the group.
- Capacity Building and Training: Banks should provide capacity building and training to SHGs to enhance their credit absorption capacity.
- Monitoring and Review: Regular monitoring and review of SHG lending by banks to ensure effective implementation of the programme.
- Encouraging SHG Linkage: Banks should encourage SHG linkage by providing incentives and promoting the programme.
- Interest Rates: Interest rates on SHG loans should be reasonable and affordable.
- Total Financial Inclusion: The programme aims to achieve total financial inclusion and meet the credit requirements of SHGs.
The master circular also includes an appendix listing the circulars consolidated in the master circular.
Chat with the Master Circular: