SELF HELP GROUPS
Financing Of Self Help Groups By The Cooperative BanksThe Government of Tamil Nadu through the Tamil Nadu Corporation for Development of Women Ltd. has implemented a scheme,called “Mahalir Thittam”. The Self Help Groups are provided financial support .Under the SHG-Bank Linkage Programme introduced by the NABARD,the Cooperative Banks provide financial assistance to the Self Help Groups fulfilling the following criteria.
Eligibility Criteria (Stage I)1. Group in active existence for over six months.
2. Group size in the range of 12 to 20 members.
3. Minimum of two meetings per month.
4. Group (not individual members) not a defaulter of Bank loans.
5. Recovery of both internal and external loans not less than 85%.
6. Availing of internal loans by not less than 50% members.
7. Regular savings by all members.
8. Proper maintenance of books of Accounts.
The groups which passed through the above screening process,by complying with all these eight essential parameters should alone be taken up for credit rating.Groups which cannot fulfill all the eight parameters should be rejected in the first phase itself and should not be taken up for rating of Groups.Such groups are always free to reapply when they fulfill the minimum criteria.
Credit Rating Of Shgs (Stage II),Once the Self Help Groups fulfill the above eligibility criteria,they will be taken up for grading / Credit rating under which marks are awarded for the following aspects.
|Sl.No||Credit Rating Index||Eligible Marks||Marks Scored|
|1.||Frequency of groups meeting (4/m,2/m,1/m)||10,5,2|
|2.||Attendance of group meetings (>90%,75-90%,<75%)||10,5,0|
|3.||Members of involvement in group(High,Medium,Low)||10,7,3|
|5.||Savings Rate(Rate by group,Rate by ext.agency)||5,3|
|6.||Average savings by members(>20,10-20,<10)||5,3,2|
|7.||Interest rate on internal loans (different rate,fixed rate)||5,3|
|8.||Degree of rotation of savings as internal loans.(>One time,<One time)||5,3|
|9.||Repayment of internal loans(100%,90-99%,85-89%,85%)||01,7,3,0|
|10.||Booking keeping.(All 7 books maintained,less 7 books maintained)||10,5,0|
|Total Marks Scored||Max 85|
- The SHGs scoring 55marks and above can be considered for a credit limit of not less than 4 times of its savings.
- SHG, scoring 35-54 marks, need not be considered for credit at present. The SHG shall be motivated to improve its performance,keeping the current rating as the base.On improving the performance to the expected level,the group may be re-evaluated for selection.
- SHGs scoring less than 35 marks should not be considered for credit assistance now.The Group may approach for re-evaluation,after the period of six months,on fulfillment of performance norms,as per rating chart.
SELF HELP GROUPS
In respect of SHGs functioning more than two years,the total maximum scores will be 100,after allotting 5 marks for Adequacy of Group reserve Fund and 10 marks for Auditing of Group Accounts.The guidelines for selection of SHGs over 2 years old for Bank loans are as under. The SHGs scoring 70 marks and above can be considered for a credit limit of not less than 4 times of its savings. SHG,scoring 50-69 marks,need not be considered for credit at present. The SHG shall be motivated to improve its performance,keeping the current rating as the base. On improving the performance to the expected level,the group may be re-evaluated for selection. SHGs scoring less than 50 marks should not be considered for credit assistance now.The Group may approach for re-evaluation,after the period of six months,on fulfillment of performance norms,as per rating chart.
Based on the rating of groups done by the joint Appraisal Committee,the following credit limits will be sanctioned by the Bank to the SHGs. The SHG will be sanctioned a term loan or revolving credit to the tune of not less than 1:4-Savings:Credit Limit Ratio. To start with the first loan may be given to an extent of 4 times of savings. After evaluating performance of group in the long run,subsequent credit limits may be fixed at more than 1:4 ratio also. It may be scaled upto 1:15 or even more in stages. The discretion of fixing the higher limits exceeding 4 times of savings to a group will be given to the Joint Appraisal Committee represented by Bank,NGO and PIU.
Purpose of the Loan
The loan may be utilized for productive purposes or consumption purposes or both.However,groups must be motivated to use credit to use credit mainly for productive purpose,as consumption loans do not generate any income to repay the loan dues.
Type of Loan
The guidelines for selection of 6 months-2 years old SHG for Bank Loan are as under.
Term Loan :
Since most members will utilize the SHG loan for rural farm and non-farm activities, which generate income at regular intervals,loans for Mahalir Thittam groups can be sanctioned as term loans.Bank may consider,on merit,sanction of a second or subsequent loan to Self Help Groups,in consultation with the NGO and PIU.
Revolving Credit :
SHG can receive revolving credit also from banks.Revolving credit is a running account like a cash credit.Revolving credit will avoid opening of many loan accounts in the name of same group in the long run.More the turnover (by way of larger and frequent credit) in the account,higher will be the total loans availed by SHG from the account,by way of any number of withdrawals by the SHG to meet member’s loan needs,upto the loan sanctioned.The limit will be reviewed,every year.Based on the performance of revolving credit account and functioning of SHG,renewal/enhancement of limit can be considered by bank,in consultation with NGO and PIU at the end of every year.For fixing enhanced limits at the beginning of the second year,the group savings,as on the last day of first year,should be considered as the base.The option of sanctioning term loan or revolving credit is given to SHG and bank.Hence,revolving credit may be sanctioned to SHGs performing to SHGs performing well,very selectively.
No margin is necessary,irrespective of loan amount.Group savings should not be blocked for meeting the margin money.Subsidy is not being contemplated under this scheme by TNCDW. However,other schemes,like TAHDCO and NBCFDC micro-credit schemes will be dovetailed with MT and made available to SHGs,with the same minimum eligibility criteria and credit rating system.Subsidy and margins would be as per the guidelines under the respective schemes.
Rate of Interest:
The present interest rate structure,as stipulated by RBI/NABARD at different levels under SHG-Bank linkage Programme,is as under:
|NABARD to SCB (Refinance) :||6.00%*|
|Banks to Self Help Groups :||9.00%*upto Rs.50000/-|
|Self Help Groups to members :||As per SHG’s decision|
All group members are jointly and severally responsible for prompt repayment of loans.No collateral security will be insisted upon.Under no circumstances,group savings should be blocked as security.
Mode of Disbursement:
Loan will be released in one Lump-sum or in stages,as requested by group to the credit of group’s savings account.As per group’s resolution,group will draw the amount and pay to needy members.
There is no holiday for repayment.No fixed repayment period can be prescribed.Repayment period will be decided by bank and SHG,jointly.
It will be allowed to continue as running account.However,the turnover in the account,(credit summations during the year) should not be less than the limit sanctioned. At the end of every year,the account has to be reviewed and renewed by the bank after studying the group’s performance and suitable limit sactioned. However,interest charged by the bank for both term loan and revolving credit has to be paid by the groups promptly.
Books And Registers To Be Maintained By The Shgs
The following Books and Registers are to be maintained by every group. Attendance Register. Minutes Book. Savings Ledger. Loan Ledger. General Ledger and Cash Book. Individual Pass Book Subscription Register.
As at the end of March 2005,the DCCBs/PACBs provided financial assistance to 44498 SHGs in Tamil Nadu.
Amount outstanding at the DCCBs/PACBs level as on 31.03.2005 –Rs10191.73 Lakhs.TNSC Bank provides refinance to the DCCBs for financing SHGs.SHGs can avail loans through the DCCBs and PACBs.