Guidance Notes on Financial Inclusion

Transcription

1 Guidance Notes on Financial Inclusion Prepared by the Group Constituted at the workshop held at NIRD,Hyderabad between the 6 th to the 16 th of February-2013 Team Members Pushpendra Singh Tiwari, BRLPS Sanjay Kr. Mishra, BRLPS Manish Bijalwan, GLPC R.L.Agarwal, CGSRLM S.K.Patra, WBSRLM Mohan K.B. Singh, ADS Arunmolishelvan, PVP, Chennai Mohan, RGMVP Sumit Chandra, YP-NRLM Ram Chandra Reddy, Consultant - NMMU Charu Lata Sharma, NMMU Sourav Roy, NMMU Rajan Babu, NMMU

2 Financial Inclusion Ensuring access to Appropriate, Reliable, Affordable, and Convenient Financial services to all poor households. Appropriate A/C opening; Savings; Credit; Insurance; Remittances; Equity; Pension; Entitlement/ Payments Reliable Accessible on a sustainable basis with dignity Affordable At fair cost Convenient - Services at their door step (within 5km ) Making poor the preferred clients of the banking system and mobilizing bank credit through institutions of poor is core to the NRLM financial inclusion.

3 Financial Inclusion Life Cycle of an SHG SHG Formation 1. Saving 2. Book Keeping 3. S/B account opening (SHG & Individual Members) 4. 1st Grading of the SHG 5. Micro Plan Preparation (Individual SHG Level) RF disbursement Micro Plan Consolidation at VO level 8. 3 rd Grading of SHG (by VO) 2 nd Grading of SHG (by bank) Insurance 7. CIF disbursement (Through VO) 6. Credit Linkage with Bank

4 1. Savings of SHGs Saving- Saving is considered as the blood of the SHG, which is flowing in the group. It is contributed by all the members who voluntarily decide to save a minimum fixed amount of money every week in the group according to their capacity. Member saving is the prime asset of the poorwomen. Types of Saving: Compulsory Savings: the amount is being collected from the members at regular intervals at the rate which has been fixed by the SHG. It should be reviewed annually and also can be fixed some higher limit when SHG members get some higher income. Voluntary Savings: The members may bring their voluntary savings as per their convenience in addition to compulsory saving. Purpose of voluntary saving could be for celebratingfestival, agriculture activity, child education, buying uniform etc. It may be saved by the Group members in any meeting. There is no limit to be fixed by group; the willing members can save whatever they can. This savings will attract interest for the Group. *voluntary savings can be taken back by the concerned member whenever the need emerge.

5 2. Book Keeping of SHGs & their Federations Books of records should be simple so that the community is able to manage it. Recording of financial transactions of the SHG is called accounting. It is very important for any institution. The meaning of accounting is to write all the financial transactions on the basis of evidential documents that may be internal or external. This is the need of the project that the Books will be understood by the literate or semi-literate person so that they will be in a position to write such books and communicate in simple language to the community. Need for bookkeeping- 1. For creating belief among interest group 2. Transparency enabling the activity of organization by all stakeholders 3. Legal compulsion- in the context of CBOs-bank linkage 4. It takes the form of records 5. To facilitate good governance 6. Helping to take the decision to take the decision to strengthen the financial health

6 Files and Documents A. SHG level- Utilization certificates (as per requirements), Loan application forms B. VO/ CDO level- Payment voucher file, MOU file, Micro-plan file, Report file, Correspondence files etc. Report From SHG To VO (Monthly) No of meeting held Member Attendance Member Savings Member wise Repayment Member wise loan Outstanding RF/CIF received Bank loan Received Repayment to bank (if loan outstanding) Member wise New Loans issued Total Income - Expenditure When to be written 1. Books of Account a) SHGS : Formal books of account designed for the purpose will be handed over to SHGs after three months of its formation b) VOs : will be written in the formally designed books of account from the very first day of transaction in the vo after its formation. BY WHOM SHGs -- by member or book keeper -- supported by staff for initial 3 months VOs -- by the book-keepers No SRLM staff will continue to write the Books Of Accounts beyond 3 months and the responsibility of book keeping to be transferred to SHG members.

7 3. Opening of Saving Account in Bank by SHG SHG should open a SB A/c with the nearest Bank branch ideally within three month of formation of the Group. No limitation of the service area is applicable on SHGs for opening savings bank A/C (Refer RBI/NABARD circular on service area approach). Steps to be observed for opening the saving bank account: Resolution by SHG to open bank account at selected bank branch Authorization of the three Office Bearers to operate the Bank account on behalf of all members with the condition that money can be withdrawn with signature of any two Office Bearers Rubber stamp of SHG SHG should comply with following norms of Bank - Sunmission of duly filled SB A/C opening form - Submission of document relating to residential proof of Office Bearers - Submission of document relating to identity proof Office Bearers - Photographs of the Office Bearers (2 copy each) SHG preferably may open 'No Frill Account' with zero balance * NB: A copy of the relevant Circular from RBI regarding the opening of SB A/Cs of SHG is annexed. Designated signatories of the SHG S/B account are required to comply with the KYC Norms. Following documents are required for the KYC 1. Proof of identity ( Any one of the documents to be submitted) Voters card Aadhar card

8 MGNREGS Job card Any card with photograph, that is issued by the government department as ID card is accepted by the banks 2. Proof of Address Voters card Aadhar card MGNREGS card Electricity bills Precaution & transparency (i) (ii) (iii) (iv) While operating the bank account the group members should depute an ordinary member along with the office bearers for ensuring transparency and development of trust among the Office Bearers and ordinary members. It will also be a first step towards the financial literacy. The group should collect the Pass Book from the Bank within time period and should get it regularly updated. The Pass Book along with the cheque book, if any, should be kept in safe custody in the manner as to decided by the group. Facilitator tips for opening of SB A/Cs of SHG Ideally Bank Mitra if placed at the bank branch level should facilitate opening of SB A/Cs for the SHG. Till the Bank Mitra is placed at the branch, Village level front line workers should ensure filling up of application form along with all necessary support documents. Follow-up at the branch level should be done by Block/ District level specialist on Financial Inclusion. Ideally, SB A/C opening of SHGs should be done in batches, of not less than 10 SHGs on each occasion. SB A/C opening of SHGs may be done on a designated day mutually agreed with Bank Branch Manager Some transaction among the SHG and bank should be encouraged after opening of savings bank account Note: The Project Staff should make effort for opening of individual SB A/Cs of all the members of SHG, at the nearest Bank branch to ensure Universal Financial Inclusion.

9 4.Grading of SHGs Grading is an exercise performed by entity for evaluation / assessment of the health / performance / strength of the SHGs. Grading of SHGs in Intensive Blocks: Type of Grading 1 st Grading 2 nd Grading 3 rd Grading Purpose of the Grading For judging readiness /eligibility of the SHG to receive RF/ICF For judging readiness /eligibility of the SHG to receive Bank Credit For judging readiness /eligibility of the SHG to receive Community Indicative Timing of the Grading 3-4 Months or on submission of Micro Plan/priority Plan from the date of formation of the SHG 6 Months or before application for Bank linkage from the date of formation of the SHG 9 Months from the date of formation of the SHG Who will Grade? VO/ CRP/ Community Representative with assistance from SRLM staff Branch Official/ Authorized representative(preferabl y of the project) of Bank,VO/ CRP/ involve VO? VO/ CRP/ Community Representative with assistance from SRLM *VO should conduct the assessment of the member SHGs in the monthly meetings based on the monthly report submitted by SHG Grading of SHGs in Non-Intensive Blocks: Type of Grading 1 st Grading 2 nd Grading Purpose of the Grading For judging readiness /eligibility of the SHG to receive RF/ICF For judging readiness /eligibility of the SHG to receive Bank Credit Indicative Timing of the Grading 3 Months from the date of formation of the SHG 6 Months from the date of formation of the SHG Who will Grade? Block Nodal Officer for SGSY Branch Official/ Authorized representative of Bank How will the process of Grading be carried out? Grading exercise is conducted with the help of grading sheet containing performance indicators based on the practice of Panchasutra. If the SHG gets at least 60% marks in the grading exercise then it is considered that the SHG has passed the grading exercise.

10 Micro Plan Preparation Definition of Micro Plan (MP): Micro planning is a process where members are encouraged to recognize, understand and evaluate their resources; analyze challenges they face; identify needs and make future plans to overcome vulnerabilities by making optimum utilization of resources and fostering convergences. Objective: 1. To instill a sense of confidence among SHG Members about their own capacity to improve their quality of life 2. To facilitate SHG Members recognize and understand their resources (individual and common) 3. To facilitate SHG Members identify the challenges they face and analyze their causes 4. To enable SHG Members systematically prepare short-term and long term goals and also develop a sense of ownership on the goals set 5. SHG Members list needs/ support required (financial; technical and convergence) for achieving the goals set and also identify sources of support 6. To enable SHG members linkages with Government sponsored welfare and development programmes 7. To motivate members to progress on the way towards economic and social empowerment

11 2 nd Meeting (Within 7 days of 1 st meeting) 1 st Meeting Within 15days of application Flow Chart for Micro Plan Preparation SHG Level Process Discussion on objective of MP with SHG by Facilitator (Ensure Participation of all members) VO Level Process Appraisal of MP submitted of each Group by loan committee of VO/ BMMU Discussion on individual Members Household profile (Family members, education, health status, Physical status, Occupation, Resources, Assets, Liabilities, access to entitlements, outstanding debts, food security issues, special category) Consolidation of needs of individual Members plan in diff groups at VO sector wise (Financial needs; technical support needs; convergence support needs) Discussion on each member profile in group identify current challenges/ hurdles faced Application by VO to BMMU for release of funds Sharing/ Discussion on the future plan by each members to overcome hurdles Ask members to prepare/confirm their plans with their family members (immediate & long-term plan) Release of fund to SHG Utilization check of fund by loan committee Discussion on individual Members & Householdfuture plan in group Prioritization of on individual Members plan Assessment of needs for execution of individual Members plan (Financial needs; technical support needs; convergence support needs) Prioritization of needs of individual Members at group level Discussion on sources of needs (Financial; technical; convergence) Filling of microplan in MP format Grading of group by facilitator Application to BMMU/VO for appraisal & sanction Who will Within 1 month of receipt of fund Receipt of fund by SHG from VO; Disbursement of fund to members as per MP Submission of UC by SHG to BMMU/VO

12 Who will facilitate MP? Initially by trained Project Staff (District/ Block/ Cluster Level) Eventually, by trained CRPs, Community Mobilizers or Trained Members of the VO NB: During the initial Phases, two or more project staff/ community representatives together should facilitate preparation of micro plan. Only after gaining considerable experience (preparation of 4-5 micro plans), single project staff/ community representatives may also facilitate preparation of micro plans When? To be done primarily in the resource and intensive blocks Minimum 2 month old SHG (Process should be initiated after at least 8 meetings by SHG) Micro-plan to be reviewed annually or at any time before infusion of external funds in SHG(micro plan for HH in first phase. Micro Plan member specific in subsequent phases?) Eligibility for Micro Plan preparation(triggers) SHG following Pancha Sutra (Regular Meeting; Regular Attendance; Regular Savings; Inter-loaning; Regular Updation of books of record) SHG received the basic training (Orientation; Leadership Development) Saving Bank A/C of SHG opened How? [Refer flow chart for Micro Plan Preparation] SHG Level Process SHGs fulfilling the eligibility criteria for Micro-Plan for training cum meeting on microplan preparation should ensure participation of all members in the meeting. The household profile of SHG members should include member wise details on - Family members (earning/ dependents), education qualification, Occupation, Resources (private and access to common resources), Assets, Liabilities, access to entitlements, outstanding debts, food security issues, special category( physically/ mentally challenged, vulnerable group ) Members should identify the challenges they face in life. Special attention should be taken to facilitate members differentiate between symptoms and challenges/ problems.the members should be encouraged to share their plan (short-term & long-term) to overcome

13 the challenges. The fundamental principle is poor have innate abilities to overcome the challenges and have plans for the same. 1. Member should discuss proposed plans at family level and finalise accordingly. 2. The second meeting of the SHG for micro plan preparation should be done within 7 days of the first meeting. 3. Each Member may share multiple plans. Prioritization of the individual plans should be done for systematic implementation 4. After prioritization of individual level plans, members should be encouraged to share the needs/ support requirement for execution of plan. At this stage no commitment for any support from the project should be shared. For financial support requirement, facilitation is required to separate own contribution and credit requirement. Members seeking credit should be facilitated to analyze outstanding credit and their repayment ability. 5. Prioritization of the needs among members in the group should be done. Careful facilitation is required at this stage. The principle for prioritization will be Poorest First. In the first round, for requirement of 3-5 members Equal distribution of any financial assistance or credit support should be discouraged. Members on subsequent priority should have an idea on when (may be in months) they would get the support. 6. Discussion on the sources of support may be taken up. At this stage the facilitator should explain the support that the SHG may receive from the project level support. 7. Filling of the micro-plan in MP format (In duplicate). (MP Format developed by BRLPS annexed). 8. Grading (Refer Grading Format 1) of the SHG submitting the MP by facilitator and application to VO. In case VO is absent the application may be sent to BMMU. 9. After receipt of funds from VO/ DMMU the SHG should disburse the funds among members as per the micro plan prepared and submitted. In case deviations are done, this should be noted in the minutes book of the SHG. 10. Within one month of receipt of fund from VO/DMMU, the SHG should submit Utilization Certificate for funds to VO or to BMMU VO Level Process 1. Appraisal of the MP should be done by the Loan Committee at VO. In case VO is absent appraisal of the MP should be done by the loan committee at BMMU level. It should be taken care that during the appraisal process, the community representative should be involved. 2. Sector wise consolidation of individual members needs should be done at the VO/ BMMU level for initiating related intervention. 3. VO should make application to CLF for release of funds. In case VO & CLF is absent, application will be sent by BMMU to DMMU. 4. The release of fund to SHGs should be done within 15 days of submission of MP to VO/BMMU

14 5. Utilization check of the funds given to the SHG should be done by the Loan committee at the VO. In case VO is absent, BMMU should conduct this process. Utilization check of the funds given to the SHG should be done by the Loan committee at the VO. In case VO is absent, BMMU should conduct this process. Role of Facilitator: Do s & Don ts in MP preparation Do s 1. During the meeting for MP preparation with SHG, facilitator should make efforts to create an environment where members can open up and have uninterrupted discussion. 2. Facilitator should ensure active participation of all members during MP preparation. 3. Facilitator should ensure that the facts shared by members are correct and should be vetted by other members in the group 4. Facilitator should ensure that during MP preparation along with discussions on financial aspects, discussions on social issues and convergence requirements be taken up 5. The facilitator should ensure that interest of the poorest members in the group is not undermined 6. MP preparation should be completed within stipulated time. However care should be taken not to fast pace the process 7. Facilitator should ensure that all discussion and decision taken during the process is documented and incorporated. 8. The final version of the micro plan should be read out to the group and changes if any should be incorporated. Don ts 1. Facilitators should not impose her/his ideas or decisions on the group during preparation of the micro-plan 2. The facilitator should not conduct MP preparation without clearly explaining to the group about the objective of MP preparation. 3. MP preparation should not be completed without finalization of repayment plan of each member

15 6. Fund management in Community Institutions There are two types of funds for the community from the project: 1. Revolving Fund NRLM would provide a Revolving Fund (RF) support to the SHGs (SHGs that have not received any RF earlier), as corpus, with a minimum of Rs. 10,000 and up to a maximum of Rs. 15,000 per SHG. The RF support, besides meeting consumption and initial production needs, would also build institutional capacities of SHGs in managing loans and funds. Eligibility to avail RF- SHGs should belong to the poorest of the poor category as per the norms decided by the SRLM for mobilization of the poor; SHG should be in active existence at least since the last 3 months; The members attendance in the meetings is at least 90% or above SHG should be practicing Panchasutra i.e. Regular meetings; Regular savings; Regular inter-loaning; Timely repayment; and Up-to-date books of accounts; The repayment rate should be 95% or above All members of the SHGs have received member level training The SHG should have a trained book-keeper (book keeper could be from within the SHG or from outside depending on the decision of the SHGs) Have not availed Revolving Fund earlier, under SGSY SHG should have Savings Bank A/C Routing of RF- The SHG will apply for RF to VO. [In intensive blocks, the MP prepared also will be attached] The VO will assess the performance of SHG (adherence to PanchaSutra) In intensive blocks the VO will also assess the MP prepared (Criteria for assessing MP is given below) In case VO is not formed, the release of funds will be done directly to the SHG by the DMMU. However in every stage of assessment of SHG and their MP, a loose VO or Community Representatives should be involved. 2. Community Investment Fund(CIF)or Seed Capital CIF is a catalyst for improving their livelihoods and quality of life of the poor communities. This may be supported further by leveraging finance from commercial lending institutions. The CIF could be used by the SHG for: Undertaking the productive livelihood enhancing activity Vulnerability reduction of the poorest such ass community managed food and health security interventions Improving access to social safety nets and entitlements

16 Promoting access to formal financial services for the poor Providing small grants to the destitute, old and the disabled in extreme poverty to meet the emergency needs CIF may be divided into two components primarily - Livelihood Fund: It consists of financing both farm and non-farm activities and service sector activities. This can be used as working capital for small enterprises also. Vulnerability Reduction Fund: This fund can be used for the purpose of reducing the vulnerability and risks faced by the disabled and vulnerable in the village. The SHGs which have prepared vulnerability reduction plan in MP can avail this fund. CIF may be sub divided into livelihood fund and Vulnerability Reduction Fund in the proportion - Livelihood Fund- 90% of CIF, Vulnerability Reduction Fund-10% of CIF based on the local situation Eligibility of the SHG to avail CIF- The SHG should be a member of VO Group have completed at least 6 months after its formation A graded SHGs SHGs which have prepared Micro Plan SHGs which had undergone basic training on fund management Eligibility of the VO to avail CIF- Village Organization must have completed 3 months VO leaders must be selected and EC and sub-committees must have been constituted in VO VO should have Bank A/c VO Office Bearers and Executive committee members should have undergone basic training on VO and fund management Bookkeepers for VO have been placed and trained. VO must introduce minimum required documents- Minute book, Cash Book etc. The CIF fund is released from DPMU to VOs as a capital for the member SHGs to cater the needs of livelihood of SHG members. The maximum amount will be Rs per SHG. Infusion of various funds in SHGs

17 Criteria for allocation of funds from DPMU to VO- This fund will be utilized as per the key non-negotiable principle of project. Each VO can receive the first allocation of Rs.5 lakhs approximately which in turn VO reallocates to member SHGs judiciously based on following criteria- 1. No. of SHGs in the VO 2. Percentage of vulnerable households (VO with higher percentage will be given priority) 3. No of A grade SHGs in VO 4. Regular meeting of VO 5. Attendance in VO meeting 6. Repayment performance from member SHG to VO (if CIF has been sanctioned earlier) 7. Books of records introduced 8. Percentage of SHG having received basic training 9. VO formalized a monitoring committee for assessment of performance of member SHGs 10. VO members received basic training Criteria for allocation of fund from VO to SHG- 1. A grade SHG will only be considered 2. SHG will higher number of members in the vulnerable category will be given priority 3. The SHG should have availed RF 4. Received basic training 5. The SHG has prepared Micro Plan (SHG with MP in which more than 50% of share goes towards livelihood will be given priority) Flow of livelihood funds among various Community Institutions Uses of Fund

18 Phase 1 Phase 2 Phase 3 RF Livelihood Fund Vulnerability reduction Fund After 3 months Directly given to SHG After 6 months of forming VO Through Village Organization to SHG Average Rs Maximum Rs per SHG Purpose- To meet the emergency needs, consumption needs, high interest debt swapping, small micro-enterprises,credit history Average Rs per SHG Purpose- To support livelihood, assetization, working capital, high interest debt swapping, Purpose- To reduce vulnerability of the SHG members- Food security, health risk, community based rehabilitation of disable SHG members Suggestive Repayment and applicable interest rate on Livelihood Funds Rate of interest (Suggestive) Repayment (Suggestive) CLF 6 % 6o installments VO 12 % 36 installments SHG 24 % 24 installments Members

19 Credit Linkageof SHGs Vision of NRLM: Every Household to be able to access a credit linkage of Rs 1 lakhover 10 year period Type of credit products available for the SHGs Cash Credit Limit (CCL) : Loan limit may be sanctioned by the bank for a period of 3-5 years based on the projected savings of the SHGs. Drawable limits for SHGs are fixed annually with aggregate ceiling of actual savings in SHGs.For calculation of the CCL, refer to the Annexure Term loans:term loan is a loan that has been sanction for a specific period of time with a regular interval of repayment. Purpose of Bank loan: Loan granted by the bank to the SHG is purpose neutral as the group decided the purpose for which the loan could be given to its members. As indicated by RBI in its circular (Refer RPCD.FID.BC.no.06/ / ,dated 1 st July 2011) The banks are expected to meet the entire credit requirement of SHG members for (a) Income generation activities (b) social need like housing education marriage, etc and (c) debt swapping. (Refer Annexure: SHG2: revisiting the SHG Bank linkage program, 27 March, 2012) First credit linkage of the group: The first credit linkage that can be availed by the SHG is 3-4 times of the SHG corpus or Rs 50,000 whichever is higher. Preparation for the Credit linkage at the SHG level: Internal assessment on SHG meeting eligibility criterion for credit linkage (can be done by VO or the SHG members themselves) Preparation of the Micro Plan. If Micro Plan is already prepared, which could be possible in the existing groups, the micro plan should be reviewed. Also, assessment should be done for the demand of credit needs from the banks. Resolution by the SHGs for taking bank loan (resolution to be mandatorily entered in the minutes register) Filing of the documents- inter-se agreement, loan application form Invite Bank manager for grading ofthe SHGs Visit to bank branch for completion of documentation formalities (only selected representatives should visit the bank branch )

20 Process of Bank linkage: Key tasks to be performed by SRLM to leverage credit for SHGs from Banks: At State Level: Work with SLBC and NABARD to set-up the sub-committee on SHG-bank linkage in the SLBC. This sub-committee will ensure regular monitoring of the SHG-Bank linkage on a monthly/quarterly basis Regular participation, review and analysis of the SHG-Bank linkage at the SLBC meetings, preferably with the Mission Director Coordinate Bankers Sensitization programfor the Controlling officer of the banks with NABARD/ BIRD. The program should incorporate classroom and immersion visit trainings, preferably. (The invitation for chief officers of bank should go from the office of Mission Director) Regular review of the Bank Linkage status at the State Level State Missions with District Team should attend DLRC meeting on a rotational basis. Annual Credit target planning to be done at the state level using the bottom-up approach and getting the Credit target approved in the SLBC meeting. Advocate for uniform documentation for the SHG-bank linkage &MIS reports with SLBC and institutionalize the same through controlling offices of various banks Capacity Building of the district level project staff At District Level: Review and analysis of the status of SHG-bank linkage in DLRC/DLCC meeting regularly. A monthly/quarterly report to be submitted Regular, interactions and meetings with the DDM, LDM and branch managers in the district(preferably monthly or bi-monthly) Coordinating the sensitization program for Branch Managers (exposure visits) Review of the Block Team on SHG-Bank linkage. Collating Data from the VO/CLF and BMMU and preparation of relevant reports for SPMU/ SLBC sub-committee District Level Staff should attend BLBC meetings regularly.

21 At Block Level: Attending BLBC meetings regularly. VisitingBank Branches within the Block regularly for identifying Branch Specific issues for Bank Linkage. Saving linkage and credit linkage planning with the Branch Manager Meeting with the Office Bearers of Federations/SHGs and community RPs to identify issues related to Bank Linkage. At Sub-Block/ Cluster Level: 1 st year:. Identification of bank branches at block and cluster level Meeting with branch managers along with district/ block managers SHG bank A/c opening as per the branch level linkage plan Internal assessment on SHG meeting eligibility criterion for credit linkage (can be done by VO or the SHG members themselves) Preparation of the Micro Plan. If Micro Plan is already prepared, which could be possible in the existing groups, the micro plan should be reviewed. Also, assessment should be done for the demand of credit needs from the banks. Resolution by the SHGs for taking bank loan (resolution to be mandatorily entered in the minutes register) Filing of the documents- inter-se agreement, loan application form Invite Bank manager for grading of the SHGs Visit to bank branch for completion of documentation formalities (only selected representatives should visit the bank branch ) Credit linkage of SHGs as per the linkage plan Monthly Monitoring of repayment to bank through VO In coordination of bank manager- a particular day every week can be dedicated to SHG bank linkage activities in which applications of SHGs can be processed in bulk 2 nd year: Promoting CRP on Financial Inclusion (bookkeeping trainers/ community auditors/ Bank Mitra) Assessing the eligible SHGs through VO for repeat credit linkage In Non-Intensive Blocks, the block level & Cluster level tasks is expected to be performed by Extension Officer (SGSY), identified Block level facilitators, CRPs, selected NGO representatives

22 Frequently Asked Questions 1. Can defaulters be member of SHGs? Will such SHGs will be able to avail the loan? a. In case the family member/relative of the SHG member is a defaulter, the member will not be considered as a defaulter b. In case the family member/relative of the SHG member is a defaulter, it should not come in the way of bank financing the SHGs c. The banks can lend to the SHGs with a few individual members as defaulters 2. Can SHG open bank account in non-service area branches? Yes 3. Will SHG be issued only the CCL or Term loans? An SHG can avail either CCL or the Term loans, as per their requirements 4. Which date must be taken as the first date for 6 months? The date of resolution on formation of the SHG should be considered as the first date for all purposes(as noted in the minutes register) 5. What is the interest rate applicable for the SHG bank loans? Govt. of India is planning to launch a scheme on interest Subvention for SHGs loans from banks. The SHGs are expected to get the credit from banks at 7% rate of interest. 6. What are the documents required for Credit linkage of SHG? a. Resolution by the SHG members b. Inter-se agreement to be executed among the members of the SHGs c. Application to the Bank 7. What is the duration for repayment of bank loan? a. In term loans, the repayment must be made as per the repayment schedule in the banks b. In CCL, the principal loan outstanding of the SHG must be fully paid to the banks once a year. The interest amount should be paid on a monthly basis. TO AVOID DEFAULTS and encourage a good repayment culture in the SHGs, the project staff must ensure that repayment(principal and interest) is made by the SHGs as per a decided schedule on a monthly basis. 8. Is there any processing charge/stamp duty for the loan to the SHGs? a. No processing/service charges is levied by banks for loans to SHGs

23 b. Stamp duty is a state jurisdiction and can be clarified by the SRLMs at the SLBC level. SRLM may also take the initiative to consult the state for waiving off the stamp duty. 9. Is collateral required for availing the loans? a. No collateral is required for the loans upto10 lakhs 10. If CCL can be merged with the S/B account? All SHGs must maintain the SB account and the CCL accounts separately. Without the information of the SHGs, the repayment for the CCL should not be adjusted from the SB account, by the banks. 11. Will bank issue the loan pass books? a. Yes, SHGs must insist for the loan pass books to be issued by the banks Annexure- Notes of strategic meeting with bankers and formation of sub-committees Uniform Guidelines for Credit Linkage of SHG with Banks prepared by the Gujarat SRLM in consultation with SLBC. Suggested format for review of SHG-Bank Linkage program at various levels. Circular no: 65(A)/MCID-04/ , issued on date- 27 th March SHG2: revisiting the SHG-Bank linkage program

24 Capacity Building on Financial Inclusion Target Groups State Staff District Staff Block Staff Community Facilitators (CMs/ SHG Book keepers, VO book keepers) Bankers Other stakeholders viz line departments Resource Person/ Trainers MoRD/NMMU/ Experts Pool of trainers at State District Level Staff / Resource Organizations District Level Staff / Resource Organizations NABARD/BIRD, exposure visits to be organized for the branch managers accompanied by the staff SRLM FI Staff in Intensive Districts/ Blocks: One FI specialist at each State, District and Block level Staff in Model Non-intensive Block: EO (SGSY) for all activities in the non-intensive blocks 1 CC to work intensively for strengthening the pre-existing SHGs to adopt Panchsutras Need to be trained to develop the resources i.e. BKs from within the community EO (SGSY) for bank linkages and line departments Capacity Building for Staff Orientation for the staff of each vertical in SRLM/DMMU/BMMU Technical training for the Financial Inclusion specific staff at SRLM/DMMU/BMMU Separate training modules according to the needs of the SHGs, Book keepers and Staff will be applicable in the technical trainings For example Training on SHG-bank linkage: For state it will consists on documents of bank, analysis of SHG-bank linkage and policy circulars but for the block level staff and Community staff and communities it will involve the operational aspects of all documentations related to banks

25 Duration (in days) of the various training programmes at different level State District Block CC BK, VO BK, SHG Financial Inclusion in NRLM Book keeping Grading of the SHGs Fund Management** SHGs Micro planning exercise SHG-bank linkage Auditing systems * Financial Literacy and credit counseling 2 * 1 year after the program initiation **Fund Management training applicable for FI specific staff and also the Finance person at the State/District Level 1: Refresher training of 5 days to be provided for Block staff and book-keepers after 4-5 months. VO bookkeeper to be trained on the VO bookkeeping 2: Financial Literacy refresher trainings every 6 months Schedule of the various training programmes at different level Financial Inclusion in NRLM Book keeping Grading of the SHGs Fund Management** Micro exercise planning State District Block CC BK, VO BK. SHG Orientation Orientation Orientation After Immersion ( 1-2 months) After Immersion ( 1-2 months) After Immersion ( 1-2 months) After Immersion ( 1-2 months) After Immersion ( 1-2 months) After Immersion ( 1-2 months) After Immersion ( 1-2 months) After Immersion ( 1-2 months) After Immersion ( 1-2 months After Immersion ( 1-2 months After Immersion ( 1-2 months After Immersion ( 1-2 months Joining Joining Joining At Joining Joining Joining Within 2-3 months Within 2-3 months SHG-bank linkage Orientation Orientation Orientation Joining Joining Joining Auditing systems * Financial Literacy and credit counseling Orientation Orientation After Immersion ( 1-2 months) After 1 year of program initiation Within 7-8 months Within 7-8 months Within 7-8 months SHGs Within 7-8 months

26 Training programmes in intensive & non-intensive blocks Trainings Under Financial Inclusion Training in the intensive Districts/ block Training in the non-intensive Districts/ blocks Orientation: Financial Inclusion in NRLM SHG Account Keeping Grading of the SHGs Fund Management Micro Planning SHG-Bank linkage Financial Literacy ICT enabled, products, services, others NB: Broad contents of each training programme is annexed Training strategy for the Financial Inclusion Sensitization of the Bankers- Controlling officer of the banks State level Pool of trainers at State level (2-3) MoU with a Resource Organization Sensitization of the Bankers LDM, DDMs, Branch managers Exposure Visits of bankers accompanied by the staff Pool of trainers at District level (5-6) Pool of trainers at Block level (5-6) Training of the district level staff / ToTs Training of the Block level staff Training of the Community Coordinators Training of the Community/ community institutions

27 (Specimen of grading tool for 1st, 2 nd and 3 rd grading are enclosed in Annexure-I, II and III.) Format for 1 st Grading Exercise Name of the SHG: Name of the GP: Name of the Village: Name of the Block: Date of formation of the SHG: Annexure-I Whether the Group has completed six months of its existence or not: (Please Note that this Grading is to be carried out only when the SHG attains the age of 6 Months or more) S.N. Grading Indicators Allotted Marks Formula / Criteria for allocation of Marks Obtaine d Marks 1 Holding Meetings 20 Total no. of meetings actually held during last 6 months X 20 No of meetings required to be held during last 6 months as per rule of the SHG 2 Attendance in 20 Average no. of members actually attended meeting during last 6 months Meetings X 20 3 Regularity of Savings 20 4 Inter Loaning 20 Amount of savings actually collected during last 6 months X 20 Amount of savings required to be collected during last 6 months Total amount of loan disbursed during last 6 months X 20 Total amount of saving fund Minute Book is well documented and is up to date 20 5 Writing of Minute Book 20 Minute Book is not well documented but is up to date. 15 Minute Book is well documented but is not up to date 10 Minute Book is not well documented and is not up to date 5 Total 100 No Minute Book is in place 0 Name Designation Organisation Signature

28 Remarks: The SHG has passed / not passed* the grading exercise (*Strike out which is not applicable) Date of Grading:- Particulars of the person who has conducted the Grading Annexure-II Format for 2 nd Grading Exercise 1. Name of the Bank: 2. Name of the Brach: 3. Name of the Taluka/GP: 4. Name of the SHG: 5. Date of formation of the SHG: 6. Date of opening of SB A/c of the SHG: 7. SB A/c No: Whether the Group has completed 6 (six) months of its existence or not: (Please Note that this Grading is to be carried out only when the SHG attains the age of 6 (six) months or more) S.N. Grading Indicators Allotted Marks Marks Obtained Meetings Conducted 10 1 a) Regular two meeting every Month b) At least 10 meetings in the last 6 month 5 c) Less than 10 meetings in the last 6 months 0 Average Attendance 2 a) More than or equal to 80% 10 b) Less than 80% but more than 60% 5 c) Less than 60% 0 Savings pattern of the members of the Group 3 a) More than 90% members contribute to the savings 10 b) Between 60% to 90% contribute to the savings 5 c) Less than 60% members contribute to the savings 0 4 Lending a) More than 75% of the total corpus is utilized 20

29 b) More than 60% but less than 74% of the total corpus is utilized c) Less than 65% of the total corpus is utilized 0 Recovery of Loans a) Recovery rate is more than 90% 20 b) Recovery rate is between 70% to 89% 10 c) Recovery rate is less than 70% 0 Annexure-II( Contd..) Page 2. S.N. Grading Indicators Allotted Marks Marks Obtained 6. Maintenance of Following Books /Records 1. Attendance and Minutes Book. 2. Cash Book 3. Savings and Loan Registers. 4. Individual Pass Book. a) a) Above Above Books Books of of Records Records maintained updated updated 20 b) Above Books of Records are partially updated 10 c) Above Books of Records are not updated 0 TOTAL MARKS 100 Remarks: The SHG has passed / not passed* the grading exercise (*Strike out which is not applicable) Date of Grading:- Particulars of the person who has conducted the Grading Name Designation Organisation Signature

30 Annexure-III Format for 3 rd Grading Exercise 1. Name of the Bank: 2. Name of the Brach: 3. Name of the Taluka/ GP: 4. Name of the SHG: 5. Date of opening of SB A/c of the SHG: 6. SB A/c No: Whether the Group has completed (9)nine months of its existence or not: ( Please Note that this Grading is to be carried out only when the SHG attains the age of 9 (nine) months or more) S.N. Grading Indicators Allotted Marks Marks Obtained Meetings Conducted 10 1 a) Regular two meeting every Month b) At least 10 meetings in the last 6 month 5 c) Less than 10 meetings in the last 6 months 0 Average Attendance 2 a) More than or equal to 80% 10 b) Less than 80% but more than 60% 5 c) Less than 60% 0 Savings pattern of the members of the Group 3 a) More than 90% members contribute to the savings 10 b) Between 60% to 90% contribute to the savings 5 c) Less than 60% members contribute to the savings 0 Lending 4 a) More than 75% of the total corpus is utilized 20 b) More than 60% but less than 74% of the total corpus is utilized 10

31 c) Less than 65% of the total corpus is utilized 0 Recovery of Loans 5. a) Recovery rate is more than 90% 20 b) Recovery rate is between 70% to 89% 10 c) Recovery rate is less than 70% 0 Annexure-III( Contd..) Page 2. S.N. Grading Indicators Allotted Marks Marks Obtained 6. Maintenance of Following Books /Records 1. Attendance and Minutes Book. 2. Cash Book 3. Savings and Loan Registers. 4. Individual Pass Book. b) Above Books of Records maintained updated 20 c) Above Books of Records are partially updated 10 d) Above Books of Records are not updated 0 TOTAL MARKS 100 Remarks: The SHG has passed / not passed* the grading exercise (*Strike out which is not applicable) Date of Grading:- Particulars of the person who has conducted the Grading Name Designation Organisation Signature