Thursday, November 12, 2015

National Rural Livelihoods Mission (NRLM)

Women SHGs and their Federations

Women SHGs under NRLM consist of 10-15 persons. Groups in difficult areas, groups with disabled persons, and groups in remote tribal areas, may have a minimum of 5 persons.

NRLM will promote affinity based women Self –help groups.

Groups formed with Persons with disabilities, elders and transgenders, will have both men and women.

SHG is an informal group and registration is not mandatory. However Federations of SHGs formed at village level, cluster level, and at higher levels are to be registered under appropriate acts prevailing in their States.

Financial Assistance to the SHGs

Revolving Fund (RF): NRLM would provide Revolving Fund (RF) to SHGs which are in existence for a minimum period of 3/6 months and follow the norms of ‘Panchasutra’ –
·        regular meetings,
·        regular savings,
·        regular internal lending,
·        regular recoveries and
·        maintenance of proper books of accounts.
SHGs that have not availed RF earlier will be provided with a RF of Rs.10,000 up to a max of Rs.15,000 as corpus.

Community Investment support Fund (CIF)
CIF will be provided to the SHGs in the intensive blocks, routed through the Village level/ Cluster level Federations, to be maintained in perpetuity by the
Federations. This fund will be used to advance loans to the SHGs and to undertake common socio-economic activities.

Introduction of Interest subvention:
NRLM provides for interest subvention, to cover the difference between the Lending Rate and 7%, on credit availed by women SHGs, for a maximum of Rs 3,00,000 per SHG. This will be available in two ways:
(i)                   In 150 identified districts, banks will lend to the women SHGs @7% up to an aggregated loan amount of Rs 3,00,000/-. The SHGs will also get additional interest subvention of 3% on prompt payment, reducing the effective rate of interest to 4%.
(ii)                 In the remaining districts, NRLM compliant women SHGs will be registered with SRLMs. These SHGs are eligible for interest subvention as above, subjected to the norms prescribed by the respective SRLMs.

Role of banks :
Opening of Savings accounts: The role of banks would commence with opening of accounts. The KYC norms are applicable for identification of the customers.

Lending Norms:
  SHG should be in active existence at least since the last 6 months as per the books of account of SHGs and not from the date of opening of S/B account.
    SHG should be practicing ‘Panchasutras’.
  Qualified as per grading norms fixed by NABARD.
  The defunct SHGs are also eligible for credit if they are revived and continue to be active for a minimum period of 3 months.

Loan amount:
Emphasis is laid on the multiple doses of assistance:
  First dose: 4-8 times of the proposed corpus during the year or Rs. 50,000 whichever is higher.

  Second dose: 5-10 times of existing corpus and proposed saving during
the next twelve months or Rs.1 lakh, whichever is higher.

• Third dose: Minimum of Rs. 2 lakhs, based on the Micro credit plan of the SHGs and appraised by the Federations and credit History.

• Fourth dose onwards: Between Rs.5-10 lakhs and higher in subsequent doses. The loan amount will be based on the Micro Credit Plans of the SHGs.
The loans may be used for meeting social needs, high cost debt swapping and taking up sustainable livelihoods or to finance any viable common activity started by the SHGs.

(Corpus is inclusive of revolving funds, its own savings and funds from other sources)

Type of facility and repayment:
SHGs can avail either Term loan or a CCL loan or both based on the need. In case of need, additional loan can be sanctioned even though the previous loan is outstanding.
Repayment schedule could be as follows:
  The first dose of loan will be repaid in 6-12 instalments
  Second dose of loan will be repaid in 12-24 months.

    Third dose will be repaid in either monthly/quarterly /half yearly based on the cash flow in 2 to 5 Years.
  Fourth dose onwards: repayment has to be either monthly / quarterly / half yearly based on the cash flow in 3 to 6 Years.

Security and Margin: No collateral or  margin up to Rs. 10.00 lakhs. No lien should be marked against savings bank account and no deposits should be insisted upon while sanctioning loans.

Dealing with Defaulters:
Wilful defaulters should not be financed under NRLM. In case wilful defaulters are members of a group, they might be allowed to benefit from the thrift and credit activities of the group. However, wilful defaulters of the group should not get benefits under the NRLM Scheme and the group may be financed excluding such defaulters while documenting the loan.

Further, non-wilful defaulters should not be debarred from receiving the loan. In case of default is due to genuine reasons, Banks may follow the norms suggested for restructuring the account with revised repayment schedule.

Credit Target Planning
Based on the Potential Linked Plan/State Focus Paper prepared by NABARD, SLBC sub-committee may arrive at the district-wise, block-wise and branch-wise credit plan. The sub- committee has to consider the existing SHGs, New SHGs proposed, and number of SHGs eligible for fresh and repeat loans as suggested by the SRLMs to arrive at the credit targets for the states. The targets so decided should be approved in the SLBC and should be reviewed and monitored periodically for effective implementation.
The district-wise credit plans should be communicated to the DCC. The Block-wise/Cluster-wise targets are to be communicated to the bank Branches through the Controllers.

Post credit follow-up
Loan pass books in regional languages may be issued. Banks should clearly explain the terms and conditions at the time of documentation and disbursement of loan.
Banks may observe one day in a fortnight to enable the staff to go to the field and attend the meetings of the SHGs and Federations.

Banks shall take all possible measures, i.e. personal contact, organization of joint recovery camps with District Mission Management Units (DPMUs) / DRDAs to ensure the recovery of loans. Banks should prepare a list of defaulters under NRLM every month and furnish the list in the BLBC, DLCC meetings.

Deputation of the bank officials to SRLMs
Banks may consider deputing officers at various levels to the State Govts/ DRDAs in consultation with them.

Supervision and monitoring of the Scheme
Banks may set up NRLM cells at Regional/Zonal offices. These cells should periodically monitor and review the flow of credit to the SHGs, ensure the implementation of the guidelines to the scheme, collect data from the branches and make available consolidated data to the Head office and the NRLM units at the districts/ blocks. The cell should also discuss this consolidated data in the SLBC, BLBC and DCC meetings regularly.

State Level Banker’s Committee: SLBCs shall constitute a sub-committee on SHG-bank linkage. The sub- committee shall meet once in a month with a specific agenda of review. The decisions of SLBCs should be derived from the analysis of the reports of the sub-committee.

District Coordination Committee: The DCC (NRLM sub-committee) shall regularly monitor the flow of credit to SHGs at the district level and resolve issues that constrain the flow of credit to the SHGs.

Block level Bankers Committee: The BLBC shall meet regularly and take up issues of SHG bank linkage at the block level. Branch wise status of SHG credit shall be monitored at the BLBC.

Reporting to Lead District Managers: The branches may furnish the progress report and the delinquency report to the LDM every month for onward submission to Special Steering Committee constituted by SLBC.

Reporting to RBI: Banks may give a state-wise consolidated report on the progress made to RBI/NABARD at quarterly intervals.

Reporting on SHG-Bank linkages: NABARD shall submit monthly report, data for which shall flow from the CBS platform to NRLM on regular basis.

LBR returns: Existing procedure of submitting LBR returns to be continued duly furnishing the correct code.

Data Sharing:

Data sharing on a mutually agreed format / interval may be provided to SRLM for initiating various strategies including recovery etc. The financing banks may enter into a Memorandum of Understanding (MOU) for regular data sharing with the State Rural Livelihood Missions, through the CBS platform.

NRLM support to the bankers:
SRLM would develop strategic partnerships with major banks. It would create enabling conditions for both the banks and the poor for a mutually rewarding relationship.

SRLM will assist the SHGs through imparting Financial literacy, extending counselling services on savings, credit and training on Micro-investment
Planning embedded in capacity building.

Improving quality of banking services to poor clients by positioning customer relationship managers (Bank Mitra).

Leveraging IT mobile technologies and institutions of poor and youth as business facilitators and business correspondents.

Community based recovery mechanism: One exclusive sub - committee for SHG Bank Linkage may be formed at village/cluster/ block level which will provide support to the banks in ensuring proper utilization of loan amount, recovery etc. The sub - committee members along with project staff will meet once in a month under the chairmanship of the Branch Manager in the branch premises with the agenda items relating to bank linkage.

Based on RBI Circular dt 30/06/15.Updated upto 26/10/15. Please visit for any further clarification if required…..          Poppy