Master Circular on SHG-Bank Linkage Programme
The Reserve Bank of India has issued a master circular on the SHG-Bank Linkage Programme, consolidating existing guidelines and instructions.
The circular covers various aspects of the programme, including:
Opening of Savings Bank Accounts: Banks are advised to open savings bank accounts for Self-Help Groups (SHGs) to facilitate their banking operations.
Lending to SHGs: Banks are encouraged to lend to SHGs, considering their creditworthiness and repayment capacity.
Interest Rates: Interest rates on loans to SHGs should be reasonable and not usurious.
Service/Processing Charges: Banks are advised to keep service/processing charges minimal and transparent.
Priority Sector: SHG lending is considered a separate segment under priority sector lending, with a target of 10% of Adjusted Net Bank Credit (ANBC) or Credit Equivalent of Off-Balance Sheet Exposure (CEOBE), whichever is higher.
Defaulters in SHGs: Banks should ensure that SHGs do not have defaulters as members, and take necessary steps to recover dues from defaulting members.
Capacity Building and Training: Banks are advised to provide capacity building and training to SHGs to enhance their credit absorption capacity.
Monitoring and Review: Banks should regularly monitor and review their SHG lending portfolio to ensure its health and viability.
Reporting to CICs: Banks are required to report their SHG lending data to the Credit Information Companies (CICs) to facilitate credit scoring and monitoring.
The circular also includes an annex listing the circulars consolidated in the master circular.
Chat with the Master Circular: