The Reserve Bank of India has raised the limit for collateral-free loans to Self-Help Groups (SHG) under the DAY-NRLM (Deendayal Antyodaya Yojana – National Rural Livelihoods Mission) from Rs. 10 lakhs to Rs. 20 Lakhs. The DAY-NRLM is the flagship program of Govt. of India for promoting poverty reduction through building strong institutions for the poor, particularly women, and enabling these institutions to access a range of financial services and livelihoods.
Buy Prime Test Series for all Banking, SSC, Insurance & other exams
Commercial banks provide loans to SHG. The new directions from RBI to commercial banks for this type of loan is as under:
- For loans to SHGs up to Rs 10 lakh, no collateral and no margin will be charged. No lien should be marked against the savings bank account of SHGs and no deposits should be insisted upon while sanctioning loans.
- For loans to SHGs above Rs 10 lakh and up to Rs 20 lakh, no collateral should be charged and no lien should be marked against the savings bank account of SHGs. However, the entire loan (irrespective of the loan outstanding, even if it subsequently goes below Rs 10 lakh) would be eligible for coverage under Credit Guarantee Fund for Micro Units (CGFMU).”
About the DAY-NRLM:
The Ministry of Rural Development (MoRD), Government of India launched the National Rural Livelihood Mission (NRLM) by restructuring Swarnajayanti Gram Swarojgar Yojana (SGSY). NRLM was renamed as DAY-NRLM (Deendayal Antyodaya Yojana – National Rural Livelihoods Mission) w.e.f. March 29, 2016.