Eligibility Of SHG for bank Loan

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The funding support from the Mission is essentially intended to act as a catalyst for the SHGs to borrow larger amounts from the banks in a gradual manner such that in about 5 to 6 years, each SHG is able to access a credit amount of ` 10.00 Lakhs. The Master circular issued by RBI on 1st July, 2017 in this regard recommends the following amounts of loans:

Cash Credit Limit (CCL): In case of CCL, banks are advised to sanction minimum loan of ` 5 Lakhs to each eligible SHGs for a period of 5 years with a yearly drawing power (DP). The drawing power may be enhanced annually based on the repayment performance of the SHG. The drawing power may be calculated as follows:

• DP for First Year: 6 times of the existing corpus or minimum of ` 1 Lakh whichever is higher.

• DP for Second Year: 8 times of the corpus at the time review/ enhancement or minimum of ` 2 Lakhs, whichever is higher

• DP for Third Year: Minimum of ` 3 Lakhs based on the Micro credit plan prepared by SHG and appraised by the Federations /Support agency and the previous credit History.

• DP for Fourth Year onwards: Minimum of ` 5 Lakhs based on the Micro credit plan prepared by SHG and appraised by the Federations /Support agency and the previous credit History.

Term Loan: In case of Term Loan, banks are advised to sanction loan amount in doses as mentioned below:

• First Dose: 6 times of the existing corpus or minimum of ` 1 Lakh whichever is higher.

• Second Dose: 8 times of the existing corpus or minimum of ` 2 Lakhs, whichever is higher.

• Third Dose: Minimum of ` 3 Lakhs based on the Micro credit plan prepared by the SHGs and appraised by the Federations /Support agency and the previous credit History

• Fourth Dose: Minimum of ` 5 Lakhs based on the Micro credit plan prepared by the SHGs and appraised by the Federations /Support agency and the previous credit History

Banks should take necessary measures to ensure that eligible SHG are provided with repeat loans. Banks are advised to work with DAY-NRLM to institutionalize a mechanism for online submission of loan application of SHGs for tracking and timely disposal of application.