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 Micro Credit and Self Help Group (SHGs)  

Inclusion of Self Help Group under PMRY

Reserve Bank of India has advised that in the meeting held on 28th May, 2004 under the chairmanship of the Secretary (SSI & ARI), Government of India, the following has been adopted:

Self Help Groups (SHGs) can be considered for assistance under PMRY provided:

  1. Educated unemployed youth satisfying the eligibility criteria laid down under the scheme, volunteer to form SHG to set up self-employed ventures (Common Economic Activity).

  2. A Self Help Group may consist of 5 to 20 educated unemployed youth.

  3. No upper ceiling on loan.

  4. Loan may be provided as per individual eligibility taking into account the requirement of the project.

  5. SHG may undertake common economic activity of which loan is sanctioned without resorting to onward lending to its members.

  6. Subsidy may be provided to the SHG as per the eligibility of the individual members taking into account relaxation provided in North-Eastern States, Uttaranchal, Himachal Pradesh and Jammu & Kashmir.

  7. Required margin money contribution (i.e. subsidy and margin to be equal to 20% of the project cost) should be brought in by the SHG collectively.

  8. The exemption limit for obtention of collateral security will be Rs.5 lakhs per borrowal account for projects under Industry Sector. Exemption from collateral will be limited to an amount of Rs. 1 lakh per member of SHG for projects under service and Business Sectors. Enhancement in limit of exemption of collateral; may be considered in deserving cases.

  9. Implementing agencies may decide necessity of pre-disbursal training for all the members/majority of the members in the group.

Reserve Bank of India Circular on Micro Credit | SBI Life ‘Shakti’| Rural Housing Loans to Self Help Groups