Loans For Self Help Groups

Purpose of Loan

  • (i) The purposes for which the group will lend to the members should be left to the common wisdom of the group.
  • (ii) Loans to SHGs for group enterprises should be discouraged in the initial stages as they have usually failed. Exemptions should be very carefully examined and supervised.
  • (iii) Loans to Self Help Groups are purpose neutral loan. Banks shall embrace concept of Total Financial Inclusion and meet the entire credit requirements of the SHG members namely a) income generation activities, b) social needs like housing, education, marriage etc., and c) debt swapping. Eligible SHGs can be financed directly and also under the following products, which covers the housing needs, income generating activities and also have component for consumption, to fulfil entire credit requirement of SHG members:
  • i) Sanction of cash credit limit for 3-5 years based on expected future saving corpus of SHGs.
  • ii) Sanction of term loan for project based requirement of SHGs.

Last Updated On : Tuesday, 20-04-2021

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