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 Micro Credit and Self Help Group (SHGs)  

Rural Housing Loans to Self Help Groups

“Sahayog Niwas”

Objectives: To finance Self Help groups for on lending to members for housing in rural areas, covering the following purpose.

  1. For the purchase or construction of a house exclusively or including the housing needs of activities carried by them. (Dairy shed, tailoring shed/shop, grocery stores etc.)

  2. For the renovation or repair of an existing house/shed.

  3. For the purchase of a plot of land for the purpose of house construction.

  4. For the extension of existing house/work space.

If the plots owned are in different places in the same village two separate loans for the purposes of dwelling area and work shed may be extend.

Operational Area : In semi-urban and rural areas where SHGs are operating.

Eligibility: SHGs which are in existence for more than 2 years and with a good track record of payment record for 2 years.

SHGs fulfilling the above conditions but maintaining their accounts with other banks are also eligible. In this case the following stipulations will be applicable:

  • The SHG should open their account with our bank.

  • The loan amount will be equivalent to 10 times of the corpus amount available in this account with us. (Inclusive of the amount transferred from other banks and kept in their account with us.)

  • All the other accounts of the SHG maintained with other banks, if any, should be transferred to our bank, say within a period of 6 months and their passbook/statement of account etc. may be kept alongwith our documents.

  • A certificate from the sanctioning/recommending authority stating that they have satisfied themselves about the credentials, track record and existence of the SHG for a minimum period of 2 years should be incorporated in the appraisal/proposal(s). However, it will not be necessary to get a certificate to this effect from any bank, which is currently the banker to the SHG.

Loan amount:10 times the savings of the corpus of SHG. This ceiling would include the loan outstanding in the limits already sanctioned to SHGs. SHG will on lend its members for housing subject to a maximum of Rs. 50,000/- per member for purchase/construction of house and Rs. 25,000/- for repairs/renovations/purchase of plot.

Classification : All loans under this scheme will be classified as priority sector advances under SHG.

Processing charges : All handling such as processing fee, ledger folio fee etc. are waived-except legal scrutiny fee which should not exceed Rs. 200/-

Security: Primary : Group Guarantee of SHG members.

Repayment: The repayment of installment to be spread over a period of 15 years and the installment amount to be fixed at monthly/quarterly/half yearly/yearly as in convenient.

Rate of interest: As offered under GJRHFS, (Golden Jubilee Rural Housing Finance Scheme) a concession of 0.25% below the card rate is allowed:

Application

Specimen copy of the “Application to be submitted by SHG to the bank branch while applying for housing loan for its members” is enclosed.

Documentation

  1. Article of Agreement for financing Housing loan to Self Help Groups (Annexure=XIII SN2)

  2. Inter-se Agreement (Annexure-XIII SN3)

  3. Arrangement Letter (Annexure-XIII SN4)

Other terms and conditions

SHG should not charge to its members more than 3% of interest rate charged by the bank under this scheme.

Reserve Bank of India Circular on Micro Credit  | SGHs under PMRY| SBI Life ‘Shakti’