Key Provisions of 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 can lend to SHGs, and the lending norms are relaxed for these groups.
Interest Rates and Charges: Interest rates and service/processing charges on loans to SHGs are to be reasonable and transparent.
Priority Sector: SHG lending is considered a separate segment under priority sector lending, with a focus on financial inclusion.
Defaulters: Banks should ensure that SHGs do not have defaulters as members, to maintain the credit discipline of the group.
Capacity Building: Banks are encouraged to provide capacity building and training to SHGs to enhance their financial literacy and management skills.
Monitoring and Review: Banks should regularly monitor and review their SHG lending to ensure the programme’s effectiveness.
Reporting: Banks are required to report their SHG lending activities to the Central Information and Control Units (CICs).
The Master Circular consolidates various circulars issued by the RBI on the SHG-Bank Linkage Programme, providing a comprehensive guide for banks to implement the programme effectively.
Chat with the Master Circular: