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 aims to promote financial inclusion and provide credit to SHGs.
Key Features:
SHGs are recognized as a separate segment under priority sector lending, and banks are encouraged to open savings bank accounts for SHGs.
SHG lending is to be integrated into the planning process, and banks are required to follow margin and security norms.
Documentation requirements have been simplified, and banks are advised to be cautious when dealing with SHGs that have defaulters.
Capacity building and training programs are emphasized to enhance the credit absorption capacity of SHGs.
Banks are required to monitor and review SHG lending regularly, and encourage SHG linkage through various initiatives.
Interest rates on SHG loans are to be reasonable and transparent, and banks are expected to meet the total financial inclusion and credit requirements of SHGs.
The circular also includes an appendix listing the circulars consolidated in the master circular.
Chat with the Master Circular: