Banking with Self Help Groups - How and Why? : A Handbook for Branch level Bankers
NABARD
Publication Date: 2000
Published by: National Bank for Agriculture and Rural Development - NABARD
Document Type: Book (PDF)
SHGs: A gateway to fulfilling social commitments and banking profits
The paper introduces the basics of self help groups (SHGs), their operations and relevance for the banking sector. The paper presents, in a handbook form, the fundamentals of the operational relationship between banks and SHGs.
The paper gives an overview of the following processes with regard to the SHGs:
- Formation.
- Functioning, including information on the requisite size, membership, meetings, book of accounts etc.
- Linkage with banks.
- Operating the bank account.
For the assessment, the paper presents a checklist which can guide bankers in loan release to SHGs. Thereafter, the paper presents guidelines for release of credit:
- Deciding the quantum of the loan.
- Deciding the rate of interest for the loan.
- Dealing with defaults.
- Lending to NGOs for on-lending to SHGs.
The paper lists the various advantages of banking with SHGs and the requisite steps in the quality control of SHGs. The paper also provides the format of documents required for recognizing and lending to SHGs.
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