Master Circular on SHG-Bank Linkage Programme
The Reserve Bank of India has issued a master circular on the SHG-Bank Linkage Programme, which outlines the guidelines and regulations for banks to follow when dealing with Self-Help Groups (SHGs).
The circular covers various aspects of the programme, including:
Opening of Savings Bank Accounts: Banks are required to open savings bank accounts for SHGs to facilitate their financial transactions.
Lending to SHGs: Banks are encouraged to lend to SHGs, and the circular outlines the guidelines for lending, including interest rates and service charges.
Interest Rates and Service Charges: The circular specifies the interest rates and service charges that can be levied on SHG loans.
Priority Sector: SHG lending is considered a priority sector, and banks are required to report their SHG lending activities separately.
Defaulters in SHGs: The circular addresses the issue of defaulters in SHGs and provides guidelines for banks to follow in such cases.
Capacity Building and Training: Banks are required to provide capacity building and training to SHGs to enable them to manage their finances effectively.
Monitoring and Review: Banks are required to monitor and review their SHG lending activities regularly to ensure that the programme is implemented effectively.
Reporting to CICs: Banks are required to report their SHG lending activities to the Credit Information Companies (CICs).
The circular also includes an annex that lists the circulars consolidated in the master circular.
Chat with the Master Circular: