Thursday, January 21, 2016

Credit information reporting in respect of Self Help Group (SHG) members

Structure of credit information collection and reporting

The structure of the credit information to the CICs is set out below.
Information from individual members where the total amount of loan by the member exceeds Rs.30,000/-
Table 1
Information from individual members where the total amount of loan by the member is upto Rs.30,000/-
Table 2
Information on all members to be reported to CICs
Table 3
Information on members to be collected at the time of opening of new Savings Bank Accounts of the SHG
Table 4

Banks shall collect information in Tables 1 and 2 and report it to the CICs as set out in Table 3. The tables have been designed based on:

(i)  Some of the information is related to the existing exposures of the members including that of the groups with whom they might have been previously associated. This information may be collected directly from the CICs. Hence, there would be no need to include this information in the dataset reported to the CICs as per Table 3.

(ii)The information requirements will be implemented in two phases. The first phase will commence from 1 July 2016 and last for one year. The depth of the credit-related information to be collected would increase in Phase II to be implemented from 1 July 2017.

(iii)        The credit information of SHG members will be restricted to those SHGs with facilities exceeding Rs. 1,00,000/-. However, all the members of SHGs irrespective of amount shall report the non-credit information when the SHG approaches the bank for a loan.

(iv)  Subject to (iii) above, the credit information for members having a share above Rs.30,000 or more, is more detailed than others. The difference will be reduced, as some more details are added to the latter in Phase II.

(v)   The non-credit information have been designed both from the perspective of identification of the individual borrowers and supplementing the information requirements of banks, regulatory and government development agencies. The information shall be reported to the CICs in a manner that allows the CICs to identify all members.

Banks shall begin collection of the information from the SHG members and reporting the required information to the CICs from 1 July 2016 ( Phase I) and 1 July 2017 (Phase II).

Banks have the option to collect and report the SHG member level data either themselves or by outsourcing it to other entities.

Banks shall start monitoring the NPA levels in the SHG segment and collect detailed information from members availing loans exceeding a lower threshold of Rs.20,000, if the gross NPA in the SHG segment exceeds 10% or is higher than the total gross NPA of the bank by 5 percentage points.

Non-adherence to the above instructions shall result in exclusion of non-compliant SHG loan accounts from Priority Sector Loan (PSL) targets.

Other operational instructions

At this stage, only the credit facilities availed of by the SHG member need to be captured. However, the need for capturing the inter-loaning among the members would be reviewed after stabilisation of Phase II.

It is not envisaged to extend the credit reporting system to the monitoring of repayment and recovery of these loans. However, this will also be considered after Phase II has taken ground.

In cases where the SHG members agree to open Small Accounts/ Basic Savings Bank Deposit Account, the information in Table 4 may be collected and kept on record to be used at the time when the SHG approaches the bank for a loan.

None of the data requirements specified in this circular should be made a pre-condition for extending loans to the SHGs.

Banks may encourage the SHGs to keep written records of loans distributed to their members out of the bank loan and may consider introducing appropriate incentives in this regard.

Banks shall develop appropriate policies to deal with applications for credit from members /SHGs on whom default is reported. They should not be denied loans merely because of such defaults. Banks should evaluate the credit history of the members and take into account the economic viability of their activity and the Groups’ capacity to service the loan.

Specific instructions to the CICs

CICs may share the information, on an aggregate basis with Government agencies like NABARD, banks and MFIs for the purpose of credit planning and research. CICs could also share the information with other parties for research that could benefit the SHG segment. The information shall be shared in a manner that is non-discriminatory and respects the confidentiality of the groups and its members.

Based on RBI Circular dt 14/01/16. Please visit for any further clarification if required….. Poppy