Friday, 27 September 2019

Self Help Group-6 , Banking Fundamentals to Know for Students.

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Direct SHG Bank Linkage: Eligibility
  • The size of the SHG should be preferably between 10 and 20 members to enable effective individual participation in the group’s deliberations.
  • The group should have been in active existence for at least a period of six months. The group may be informal or formal (registered).
  • The group should have successfully undertaken savings and credit operations from its own resources.

Direct SHG Bank Linkage: Eligibility
  • Democratic working of the group wherein all members feel that they have a say should be evident.
  • The group is maintaining proper accounts/records.
  • The branch should be convinced that the group has not come into existence only for the sake of participation in the project and availing benefits thereunder. There should be a genuine need to help each other and work together among the members.
  • The SHG members should preferably have homogeneous background and interest.

Direct SHG Bank Linkage: Eligibility
The group should have satisfactory internal savings and credit activity for at 
least six month
To be assessed in terms of Group dynamics like -vibrancy,
cohesion, goal-oriented action, participation of members,
democratic decision and collective leadership group 
functioning  (actually as a group, or not) regular meetings
maintaining a record of financial/other transactions norms 
regarding membership, meetings, etc Group leaders to be 
elected by members and rotated periodically

Transparency in operations of the group and participatory 
decision making
Rates of interest on loans to  be decided by the group
Group liability and peer pressure to act as substitutes for 
traditional collateral.
Savings - amount, periodicity
Credit - procedure for sanction, ceiling amount, purposes, 
rate of interest to be charged, repayment period, etc.
Fines - in case of default in attending meetings, savings, and 
credit repayment. Group may also levy fines for any deviant behavior etc.
Personal/social improvement - minimum literacy level to be 
achieved, social work to be done etc.

SHG - Bank linkage: a practical approach

Identification of active SHGs in the villages & establishing 
close contacts.

Opening of a SB A/c. in the name of SHG with a resolution 
copy from the SHG.

Receiving loan application from the SHG duly sponsored  by 
the promoting NGO if any.

Attending a group meeting at the village to

 observe the SHG and verify the records  and                 find out the objectives of  SHG/NGO. 

Wednesday, 25 September 2019

Self Help Group-5 , Banking Fundamentals to Know for Students.

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What  SHGs do?

•  Meet regularly 

  Compulsory  attendance

  Maintain records

  Create & develop common fund
  Internal  lending
  Discuss the problems  of  members
  Avail  bank loan
  Encourage income-generating activities
  Arrange skill development training
  Inculcate banking habit
  Take up joint ventures
  Take part  in  community / social activities


  Flexibility,   transparency  &  autonomy
  Democratic functioning
  Self-discipline & conflict resolution through consensus
  Collective  leadership & decision making
  Creation &  development of  common fund
  Loans  without collateral
  Small, Timely  &  need-based  credit at doorstep
  Market-related interest rates
  Default management  through  peer pressure
  Transparency  in  operations
  Repeat  loaning  with  impressive recovery
  Take up  social and cultural activities

Credit  flow  from  SHG  to  members
   Loans  for  -
  a)  Consumption purpose
  b)  Production purpose
  c)  Consumption  &  production purpose  

Advantages  of  SHG  to  members

  Credit  delivery  at doorstep
  Flexible norms  in  credit dispensation
  Mutual trust and co-operation
  Development  of  thrift  habit among poor
  Financial  &  social empowerment
  Employment  generation
  Confidence building among members
  Improvement in  standards  of  living
  Entrepreneurship development
  Asset  creation
  Low-interest rate
  Availability  of  small and need-based  credit
  No  security
  Convenient  repayment schedule

Advantages  to  Banks
•  Wider coverage
  Less  desk work  to  field staff
  Low  transaction  cost
  High  recovery
  Externalization  of  credit  function
  Goodwill creation &  image  building
  Meeting social  objective
Books maintained by SHGs
vThe quality of books of accounts maintained by SHGs is an area of concern.
We may encourage Local Book Writers in association with concerned agencies promoting these SHGs.
Such arrangement may be on a cost-sharing basis with some support from the Bank. 

Tuesday, 24 September 2019

Self Help Group-4 , Banking Fundamentals to Know for Students.

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Agencies connected with SHG movement 

  Poor people
  N.G.O.s /  SHPI

Role of  poor

Forming into homogenous &  affinity  groups  with the help of  NGO/SHPI/BANK/GOVT

  Mobilize  savings from members
  Internal  lending
  Involving  in social  &  cultural  activities 
Role of  NGO / SHPI

Formation of groups
  Nurturing and development of groups
  Capacity building through training
  Arranging credit linkage with Banks
  Skill development  of  SHG members 
   Training group members in records keeping
  Development of leadership qualities among members
  Liaison with  Banks and Government agencies
  Train group members in new technologies

Role of Banks

  Provide credit to SHGs for internal lending
  Provide credit  for joint ventures  of SHGs
  Conduct awareness programs to SHGs  /  bank staff
  Promoting community development activities 

Role of  NABARD
Capacity building support to Partner Institutions
  Loan fund support
  Support to Government & formal agencies
  Support to RRBs and  Commercial Banks
  Support to NGOs
  Support to farmers’ clubs
  Support to independent Volunteers
Role of Government

Formation of groups among rural poor
Provide revolving fund support
Provide support for group activities   (NRLM)
Empowering the poor (Financial and   Social)
Create awareness among poor
Provide linkages 


Monday, 23 September 2019

Self Help Group-3 , Banking Fundamentals to Know for Students.

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Why  Self  Help Groups?
Bank  credit  is  not  reaching   poorest of poor
  Banks lend  for production purpose
  Poor  need  money  for  consumption
  Cumbersome lending norms  by  Banks
  Timely  and  adequate credit not available for  poor
  Security oriented lending   by  Banks


MICRO CREDIT (MC): MC is  defined  as  a process  of  meeting  the capital  investment needs of individuals and groups for the startup and sustenance of small business enterprises”.
MICRO FINANCE (MF): “MF  refers  to the entire range of  financial  services  to the poor,  skill up-gradation and entrepreneurial development to overcome poverty.”

FIDD.FID.BC.No.02/12.01.033/ 2015-16 
(July 01, 2015 )

  An important step in the Linkage Programme would be the training of the field level officials and sensitization of the controlling and other senior officials of the bank.
  Considering the need and magnitude of training requirements of the bank officers/staff both at field level and controlling office level, the banks may initiate suitable steps to internalize the SHGs linkage project and organize exclusive short duration programmes for the field level functionaries.

  In addition, suitable awareness/sensitization programmes may be conducted for their middle level controlling officers as well as senior officers. 


A Self-Help Group [SHG] is a small economically homogeneous and affinity group of rural poor generally not exceeding 20 members  voluntarily coming together :

vTo save small amounts regularly
vTo mutually agree to contribute to a common fund
vTo meet their emergency needs
vTo have collective decision making
vTo solve conflicts through collective leadership and mutual discussion
vTo provide collateral-free loans with terms   decided by the group.

How the groups are formed?
Groups are  formed with the help of:
v   N.G.O. (Non-government   organization)
v  S.H.P.I.(Self-help group promoting   institution)
v  VVV clubs
v  Government  agencies
v  Banks

Banking & Finance Questions and Answers

Lendings-8 , Banking Fundamentals to Know for Students.

Blog on  Banking Technology for Common Customer  --  Click Here In States, where one of the minority communities notified is, in fact,...