As you are aware, Deendayal Antodaya Yojana – National Rural Livelihood Mission (DAY-NRLM) is a flagship program of Govt of India promoting poverty reduction through building strong institutions of Poor, particularly women, and enabling these institutions to access a range of financial services and livelihood services, Banks are extending credit support these institutions of poor i.e. Self Help Groups (SHGs).
In this article, you’ll see some important FAQs related to Self Help Group to get a better understanding of the topic.
Q. 1. Can a Self Help Group open a Saving Bank Account in the nearest branch of a bank that is not in their service area?
Ans: Absolutely, Self Help Group can open a savings account with any bank.
Q. 2: Is it necessary for the Self Help Group to be registered for opening the Saving Bank Account?
Ans: The registration for Self Help Group is not required for opening the bank account for saving. Self Help Group may or could need to register.
Reference may be made to the RBI master circular on Micro Credit No RBI/2010-11/407, RPCD. FID. BC. No. 53 / 12.01.001/ 2010-11 date 14 Feb., 2011 and master circular on SHG bank Linkage No RBI/2017-18/11, FIDD.FID.BC.No.02/ 12.01.033/ 2017-18 dated July 3, 2017 page 3 item No 6.
Q.3: What are the documents required for opening a savings bank account with the Bank for Self Help Group?
Ans: Following documents are required for opening the saving bank account for Self Help Group:
(i) Account Opening Form
(ii) Resolution of the SHG for the opening of saving bank account with the Bank and authority to office bearers to open and operate the account.
Operation of the account may be either by any two office bearers or otherwise as deemed fit by the members.
(iii) Two/three Passport size colored photographs of Office bearers.
(iV) Seal of the SHG.
(v) KYC documents of the office bearers for identification and address proof.
As per RBI master circular on SHG bank Linkage No RBI/2017-18/11,FIDD.FID.BC.No.02/12.01.033/2017-18 dated July 3, 2017 page 3 item No 6. Passport/driving licence/Aadhaar card/voter Identity Card/Job card/any other document acceptable to the Bank. If e-KYC of office bearers is done by the Bank, no other documentary proof other than the Aadhaar card is required.
Q.4:- What type of saving bank account should be opened by the Self Help Group with a Bank?
Ans: The account could be a Basic Saving Bank deposit account or standard Saving Bank Account. However, it is recommended to open a regular savings bank account is created to keep from confusion later on since there are restrictions on withdrawals, deposits and balance limits for the Basic Saving Bank Deposit Account.
Q.5: Whether PAN No is required for opening the saving bank account of the Self Help Group with the Bank?
Ans: PAN No is not necessary for the opening a bank account of the Self Help Group instead FORM 60 has to be furnished.
As per the Central Board of Direct Taxes Notification dated 6th January 2017, the details of the SHG members have to be furnished in column 18 of FORM 60.
Q. 6: Do KYC of all members are required to open saving accounts of Self Help Group?
Ans: No. KYC confirmation of each member of SHG will not be needed when opening the Savings account in the bank for Self Help Group. Self Help Group as KYC verification of all office bearers is sufficient.
Q.7: Whether the presence of all Self Help Group members is required in the Bank branch at the time of opening the Savings Bank account of the SHG?
Ans: The presence of all SHG participants isn’t necessary when opening an account with any Bank. The presence of only office bearers is sufficient to satisfy the KYC requirement.
RBI master circular on SHG bank Linkage No RBI/2017-18/11, FIDD.FID.BC.No.02/12.01.033/2017-18 dated July 3, 2017 page 3 item No 6.
Q.8: When the saving account should be opened with the Bank by the Self Help Group?
Ans: Saving account of the Self Help Group should be opened with the Bank within two months of the formation of the Self Help Group.
Q.9: Which date should be considered for the formation of the Self Help Group?
Ans: The date of resolution on the formation of Self Help Group should be considered as the first date for all purposes (As noted in the minute’s Register).
Q.10: Does an authorization letter required from Govt/Gram Panchayat to open a savings account of SHGs?
Ans: No, authorization letter from GP/BDO/Any other Govt. Department is not required to open the saving bank account of the Self Help Group.
Q.11: If no dues/no objection certificate is required for obtaining a Bank loan?
Ans: SHGs are not required to obtain No dues/no objection certificate for a Bank loan.
Please refer RBI circular No RBI/2017-18/8, FIDD.CO.LBS.BCNo1/02.01.001/20-17-18 dated July 1, 2017 item 8.1.
Q.12: What are the eligibility criteria for the Self Help Group to avail Bank loan?
Ans: The following conditions should be fulfilled for availing bank loan:
The Self Help Group should be inactive existence at least since the last for 6 months as per the Books of account of SHG and not from the date of opening of SB account.
SHG should be practicing Panchasutras i.e. Regular Meetings, Regular savings, Regular inter-loaning, Timely repayment, and up-to-date books of accounts.
Qualified as per the Grading norms fixed by NABARD.
RBI master circular on SHG bank Linkage No RBI/2017-18/10, FIDD.FID.BC.No.02/12.01.033/2017-18 dated July 1, 2017 page 5 item No 7.2.1.
Q.13: If the existing defunct SHGs are also eligible for Bank loans?
Ans: The existing defunct SHGs are also eligible for the credit if they are revived and continue to be active for a minimum period of three months.
RBI master circular on SHG bank Linkage No RBI/2017-18/10, FIDD.FID.BC.No.02/12.01.033/2017-18 dated July 1, 2017 page 6 item No 7.2.1.
Q.14: What are the margin and collateral security required for a Bank loan?
Ans: No margin or collateral is required up to Rs. 10.00 lakh limits to the SHGs.
RBI master circular on SHG bank Linkage No RBI/2017-18/11, FIDD.FID.BC.No.02/12.01.033/2017-18 dated July 3, 2017 page 8 item No 7.4.
Q.15: Whether Bank can mark a lien or block the saving Bank account of the SHG while making finance to the SHGs?
Ans: Bank cannot mark lien against Saving Bank account of the SHG and no deposits can be insisted upon while sanctioning loan.
RBI master circular on SHG bank Linkage No RBI/2017-18/10, FIDD.FID.BC.No.02/12.01.033/2017-18 dated July 1, 2017 page 8 item No 7.4.
Q.16: Can Bank deduct/debit the amount (either from loan or saving) of the SHG if the spouse of the members is a defaulter of earlier schemes?
Ans: Bank cannot debit Self Help Group account either savings or loan if the spouse of any member is defaulter of earlier schemes.
Q.17: What are the processing charges and service charges of the Banks for Self Help Group loans?
Ans: There should be no loan-related charges or ad hoc service fees or inspection charges should be imposed on loans that exceed Rs. 25,500 per member for loans made to the SHG.
RBI master circular on SHG bank Linkage No RBI/2017-18/11, FIDD.FID.BC.No.02/12.01.033/2017-18 dated July 3, 2017 page 5 item No 15.
Q.18: What constitutes the Corpus of the SHG?
Ans: As shown in the books of the SHG, Corpus of the SHG includes:
Savings of the members
Interest earnings by SHG from on lending to its members
Revolving Fund
Income from other sources
Funds from other sources including donations
RBI master circular on SHG bank Linkage No RBI/2017-18/10, FIDD.GSDD.BC.No.04/09.01.01/2017-18 dated July 1, 2017 page 7 item No 7.2 (Last para).
Q.19: Can earlier loan defaulters be members of the Self Help Groups?
Ans: Members who have availed loans earlier from the financial system and could not repay their dues can be admitted as a member of the SHG but they cannot avail of any loan from Self Help Group out of the Bank Finance.
Q.20: Can such SHGs have defaulters as members availing loans from the Banks?
Ans: Group members who are in default will not be eligible for benefits under DAY-NRLM Scheme. The group could be funded with the exception of such defaulters. The bank will fund according to the loan requirements of the remaining SHG members who aren’t willing defaulters.
RBI master circular on SHG bank Linkage No RBI/2017-18/10, FIDD.GSDD.BC.No.04/09.01.01/2017-18 dated July 1, 2017 page 8 item No 7.5
Q.21: Can the bank deny a loan to the SHG if the spouse or any other member of the family is defaulter of the Bank.
Ans: Banks should not deny loans to the entire SHG on the pretext that spouse or other family members of individual members of SHG being a defaulter with the Bank. Nonwillful defaulters should not be debarred from receiving the loan.
RBI master circular on SHG bank Linkage No RBI/2017-18/10, FIDD.GSDD.BC.No.04/09.01.01/2017-18 dated July 1, 2017 page 8 item No 7.5
Q. 22: Will SHG be able to raise only one type of loan i.e. either Term Loan or CCL?
Ans: SHGs can avail Term Loan or CCL or both as per their requirement. In case of need, the additional loan can be sanctioned even though the previous loan is outstanding.
RBI master circular on SHG bank Linkage No RBI/2017-18/10, FIDD.GSDD.BC.No.04/09.01.01/2017-18 dated July 1, 2017 page6 item No 7.2.2.
Q. 23. Is it essential for the SHG to deposit the entire savings in the bank to avail Bank Loan?
Ans: No Bank cannot insist on depositing the Savings of the members in the Bank or take Savings as Collateral.
Q.24: Is it mandatory for the SHG to avail loan from the bank for productive purposes only?
Ans: The loans may be used by the members for meeting social needs, high-cost debt swapping, construction or repair of house, construction of toilets, and taking up sustainable livelihood activities by the individual members within the SHG or to finance any viable common activity started by the SHGs.
RBI master circular on SHG bank Linkage No RBI/2017-18/10, FIDD.GSDD.BC.No.04/09.01.01/2017-18 dated July 1, 2017 page7 item No 7.3.1.
Q.25: What is the amount of stamp duty to be charged by the banks for loans to SHGs?
Ans: Stamp duty is under State jurisdiction and can be clarified by the State with the help of the SLBC. In most of the states, stamp duty on loan documents for the SHGs has been waived. States can take the matter at the appropriate level for exemption of stamp duty.
Q.26: Are there any penal interest charges by the bank on Self Help Group loan accounts?
Ans: There is no penal interest for loans up to Rs. 25000/- per member as loans to SHGs are considered as Loans to Weaker Section under Priority Sector.
Q.27: Can loan Passbooks be issued to the Self Help Groups by the Banks?
Ans: Loan Pass Books in the Regional Languages may be issued to the Self Help Group which may contain all the details of the loan disbursed and terms and conditions applicable to the loan sanctioned.
RBI master circular on SHG bank Linkage No RBI/2017-18/10, FIDD.GSDD.BC.No.04/09.01.01/2017-18 dated July 1, 2017 page9 item No 9.1.
Q.28: Can a Bank sanction more than Rs. One lakh loan to the Self Help Group in the First Year/First Dose?
Ans: Drawing Power for the first year in case of Cash Credit Limit is 6 times of the existing corpus or minimum Rs. One lakh whichever is higher and in the case of Term Loan the first dose is 6 times of the existing corpus or minimum Rs. One lakh whichever is higher. Thus the loan amount for the first year or first dose may be more than Rs. One lakh.
