What is a Self-Help Group ?
Dictionary (COD) defines Self-Help as—
NABARD’s Development Policy Department defines Self Help Group as—
“Voluntary organization of people operating within a frame work of rules and regulations for common economic and social objectives with an approach of participatory decision-making and sharing of benefits in an equitable manner”. (Vide Circular No.NB.DPD.SHG/3755/92-APACS/93-04 dated 02/03/1994).
Characteristics of a Self-Help Group
Difference of SHG from other anti-poverty programmes
Eligibility and Entitlement
A Self-Help Group, with unbroken record of having deposited their periodical savings for at least the last six months at weekly/ fortnightly / monthly intervals on behalf of each of its members at the pre-determined rate and periodicity (both decided by the Group through unanimous decision adopted in its meeting, duly recorded), may be financed either through the member Primary Co-operative Agricultural Credit Societies (PACS) or direct by the Branches of the Bank in semi-urban, urban or metropolitan areas where there is no member PACS, provided that in the later case the SHG shall become a nominal member of the Bank. Loan will be available for any productive (agriculture, industry, service, trade etc.) or consumptive purpose, but the total amount of loan to the SHG (for any one or more members) will not exceed four times of the total cumulative savings of the SHG as a whole (i.e., the total deposit mobilized by all the SHG members).
Preconditions for SHG – Bank linkage
Period of Repayment
Repayment period will generally be 12 to 60 months, depending on the activities to be undertaken by the SHG members and the periodicity of repayment will be monthly (equal monthly installments).
Rate of interest
As may be decided by the Bank from time to time.
Security to be held:
The borrowing SHG/ PACS shall deposit the savings of the SHG members with the Bank and since based on the quantum of deposit so mobilized, loan upto 4 times will be provided, this amount (along with further amounts to be deposited by the SHG/ PACS at pre-determined rate at periodical intervals) shall be treated as Security for the loan.
List of the documents to be submitted
Such other documents as the Sanctioning Authority will call for.
Appraisal and Sanction: All loans of this type shall be appraised by the Branch Manager himself or any official authorized by him with reference to the Loan Manual of the Bank specifically recommended by the Branch Manager/ Manager of the Branch, processed at the Regional / Head Office level and then considered and sanctioned by the appropriate Committee of the Bank duly authorized by the Board of Directors from time to time or by the Board of Directors itself.
Do’s & Don’ts for Banks / PACS