No.

Matter Referred

Clarifications

Scheme

1.

State Governments have been informed that from 1.4.1999 only the BPL census list that has been undertaken in IX Plan (1999-2000 to 2003-2004) will be the valid list.

Average size of family that can be taken into account for calculating the income level to identify BPL families.

Ministry of Rural Development has confirmed that the IXth Plan BPL list is available with Local Authorities. The list will be made available to all the banks.

BPL list is the basis for consideration for assistance.

2.

Formalities for formation of SHG & for lending to SHG would require minimum one year whereas individuals may be assisted immediately. Due to delays for SHG lending, individual lending is preferred by Swarozgaris. Relaxation may be granted for SHG, financing during 1999-2000.

The SHG formation should take required time and should not be driven by any targets. Process approach for formation of groups should be followed as detailed in the guidelines. Existing DWCRA groups may be considered for financing in key activities, if they possess characteristics of a good SHG. As a relaxation during 1999-2000, more number of individual Swarozgaris may be financed under SGSY.

3.

The stipulation on category wise reservations (40% for Women, 50% for SC/ST, 3% for disabled) should be relaxed and flexibility offered.

Achievement of sub-targets may be ensured by Banks at District level. Flexibility is not possible as the focus of the scheme will be particularly on vulnerable groups

Skill Upgradation

1.

Financial assistance to undergo skill development training conducted for more than a week.

(a) Maximum ceiling limit/mode/period of repayment.

Quantum of assistance for skill development training would be dependent on the nature of skill development, the institution facility available in the locality and the period of training. It would also depend on the nature of the activity and the Swarozgari. It would not be possible to prescribe any period of training. The cost would vary accordingly.

These issues may be decided at the District-SGSY Committee level. As the borrower has to undertake an activity and start repaying the skill development loan along with activity specific loan. The repayment period may run concurrently.

Mode of payment is left to the individual judgement of the lending bank.

(b) Inclusion of the cost of training as part of the project and release the loan for training as 1st instalment so that we can minimise the documentation formalities, (only one account instead of two separate accounts)

Separate documentation would be necessary, as the project cost would be disbursed separately after the training.

ii) Who will fix the quantum of assistance locally?

By and large, the scale of assistance is fixed by the District SGSY committee. Minor variations, if any, can always be decided by the banks in consultation with the line department officials or the DRDA officials.

iii) Whether loan is to be given to the individual swarozgari or to the group?

Loan can be given either to the group or to the Individual Swarozgari.

Activity Clusters, Key activities

1.

Block SGSY Committee should compile and update the data on village profile.

Choice between spread and cluster based efficiency should be left to Block SGSY Committee.

Key activities to be pursued by the Swarozgaris will be on the basis of village profiles/P.L.P./S.A.A./Credit Plans. Block SGSY Committee will have the say in the selection of Key activities and spread/ clusters.

Self Help Groups

1.

Modalities to ensure sub targets for SC/ST, Women and Physically handicapped in the case of group loan.

Sub targets may be monitored by the banks at the District level to achieve required targets.

2.

Exit route for member of the group or in the event of death with particular reference to sharing of liabilities of the member and savings made by the member.

As per Bye-laws/agreement of the group.

3.

Whether a member in a group can avail of two subsidies one by availing individual loan supported by the group and another loan by being a member of a group in the case of a group loan.

Member can avail subsidy individually or as a member of a group.

4.

Whether the member of a family can become member of different group and avail loan?

Yes. The subsidy is given to the group and not to the individuals.

5.

If Bank advance is granted to any individual member, then how the loan accounts will be maintained in Bank Books? Such loans to individuals would not conform to group approach.

The loan is either to an individual in a group or to a group and the books will be maintained accordingly. The loan may be given to the members and routed through SHG and recovery may be made though SHG.

6.

Whether a group with less than ten members can be considered?

Minimum of ten members must be maintained in a group other than those for disabled and minor irrigation activities.

7.

Existing SHGs (including BPL and non-BPL families) offer ready scope for coverage under SGSY?

BPL members of a mixed group can avail loans in individual capacity. Mixed groups are not entitled to group subsidy. However, an exception has been made for DWCRA groups for this year only.

8.

Appropriate Grading criteria should be established for newly formed groups. The procedure for assessing and selecting the agencies to do the grading, training etc. have not been elaborated in the new SGSY guidelines.

DCC/SLBC can decide the grading based on NABARD rating norms. No external agency is required unless DCC/SLBC decide otherwise.

Revolving Fund

1.

(a) Whether the cash credit will be of permanent nature or can be recovered on reducing balance over five years and terms of the loan.

The revolving fund - (cash credit facility) may be necessary on a permanent basis and may co-exist with the SHG.

(b) When the account has to be brought into credit balance adjusted.

Cash Credit account should be monitored continuously and renewed periodically depending on the necessity.

(c) Rs. 10,000/- paid by DRDA has to be repaid or not or treated as grant?

Rs. 10,000/- from DRDA may be treated as subsidy grant in so far as the bank is concerned. As far as group is concerned, it is a cash credit and has therefore to be repaid. Only, interest is not charged on outstanding upto Rs. 10,000/-).

(d) Method of liquidation of CC A/c.

It would be liquidated like any other cash credit. The liability of the group is for the entire amount of cash credit outstanding.

2.

(a) Mode of sanction and recovery under revolving fund is to be clarified. Whether it would be Rs. 25,000/- for all groups and linked to thrift ratio or number of members.

Revolving fund is not linked to the savings but is given only to those groups that have passed the first round of grading. Revolving fund would be Rs. 25,000/- for all groups irrespective of number of members and may be opened in the name of SHG. The operation of the account may be decided by a resolution of the group. The account will be in the form of cash credit. Interest will be charged on credit availed in excess of Rs. 10,000/-. Bankers may decide the quantum of cash credit limit within the overall limit of Rs. 25,000/- (Rs. 10,000/- + Rs. 15,000/-). The cash credit account (RF) may continue

till the SHG is in operation and the fund is operated to the satisfaction of the lending banker.

(b) Whether the operative limit or RF A/c. is to be reduced to Rs. 15,000/-

The operative limit will remain at Rs. 25,000/-

(c) Whether the banks have to take documents for Rs. 25,000/- or Rs. 15,000/-.

Banks will have to take documents for Rs. 25,000/-.

3.

(a) How is the DRDA subsidy of Rs. 10,000/- to be treated? Should it be credited to the cash credit account straight away or to be kept in a separate non-interest bearing account as deposit?

It is a subsidy for Revolving Fund of the group and therefore may be kept in subsidy Reserve Fund A/c. in the name of SHG. This would, therefore, not attract CRR/SLR requirement. No interest should be charged on the Rs. 10,000/- credited to the subsidy reserve fund i.e. the SHG would be required to pay interest on bank credit portion only.

(b) The loan or subsidy does not bear any relation to the number of members in the group which may vary from 5 to 20 in a SHG. Groups with smaller membership will get more per capita revolving fund.

The loan amount would depend on the project undertaken by the group. The Revolving Fund and Subsidy limits are for a group and variation in per capita revolving fund/subsidy will therefore exist.

(c) Revolving fund loan/subsidy does not bear a relation to the group savings. Group savings indicate the capacity of the group to rotate the funds among themselves.

Revolving fund and subsidy are two supports available for SHGs under SGSY and their entitlement are not linked to savings.

(d) Security and interest norms for Revolving fund.

For Revolving Fund, simple letter of undertaking from Group members would be sufficient in addition to inter-se agreement and usual documentation. The interest would be charged on bank credit portion of Revolving Fund . The rate would be as applicable to priority sector lending.

4.

Under what sub-head revolving fund loan is to be categorised within priority sector?

May be shown under loans to SHGs under priority sector.

Lending Norms

1.

Second and subsequent doses may be granted by the same bank or any other bank. How a borrower under a service area will be accommodated by another bank for 2nd/multiple dose.

In terms of para (vi) of our circular dated 1.9.1999, if the bank is not in a position to grant second/multiple dose, as in the case of Weak Commercial Bank/Co-operative Bank/RRB, another bank may finance the borrower after obtaining no objection certificate from the lending bank. In such cases, borrowers may be allowed to go beyond the Service Area. SGSY Committees at Block/District may decide such cases.

2.

An individual who has availed a non minor irrigation loan is willing to avail a loan for minor irrigation. Eligible quantum of subsidy may be specified.

A SGSY borrower under non minor irrigation will not be eligible for assistance and subsidy entitlement under minor irrigation loan.

3.

Who is responsible authority for preparation of project profile and who will decide the reality of the profiles, technical feasibility, economic viability etc. for each block and who is the authority for approval?

The Block SGSY Committee is required to prepare project profiles of 8-10 key activities. For this, the potential linked plans of NABARD, village credit profile of SAA may be relied on. These project profiles along with recommendations of Panchayat Samiti should be forwarded to District SGSY Committee which will scrutinise the proposals and approve them.

4.

Whether the stamp duty on Hypothecation agreement, general form of Guarantee and Irrevocable Power of Attorney is waived or not? If not, the quantum of stamp duty to be levied for each document?

The waiver of stamp duty on various documents to be executed by individual/ group loanees rests with the State Governments.

5.

Title of loan account in case of Group finance

It should be name of the group and denoted as XYZ - SHG-village.

6.

(i) Whether cash disbursement is allowed in farm sector also.

(ii) If so, what is the limit?

(iii) Whether cash disbursement will be applicable in all the blocks in a district or the identification of blocks for cash disbursement system will be entrusted to the DCC/Dist. SGSY Committee in order to ensure necessary safeguards for this purpose?

Banks may disburse all loans for agricultural purposes in cash and this will be applicable in all Blocks/Districts.

7.

Emphasis is laid on multiple doses of assistance. Whether the credit can be given to more than one activity? Whether subsequent doses of credit can be provided to the same activity or to different activity?

More than one activity can be assisted. However, the activity should be within the key activities identified.

8.

In case of financing through SHG, the savings mobilised by SHG may be taken as margin. A stipulation of bringing in a margin of 25% by way of group savings will reduce the future debt service burden of the beneficiaries.

Savings of the group need not be linked to the loan under SGSY as the target group is from the BPL list. Loan is given to a SHG. only if the grading is satisfactory (para 3.1 of the guidelines). As per the guidelines full project cost has to be financed.

9.

It is stated that under-financing should be avoided. Does it mean that the individual banker has absolutely no discretion to determine the amount of loan?

Financing of the project has to be as per the project profile. The project profile indicates the amount of investment that is required for each activity. However, the bankers do have a final say in the sanction of loans as indicated in the guidelines.

10.

Documents to be obtained from individuals/ SHG under SGSY

The application and documentation formats provided for individuals/group loaning under IRDP may be used with suitable modifications under SGSY.

Insurance Cover

1.

Please advise mode of ascertaining the date of birth of a Swarozgari in the case where loan is extended to a person between 55 to 60 years.

The Swarozgari's ration card, voter's list, BPL list and if literate, school leaving certificate or if nothing is available his declaration would be sufficient to determine the age of Swarozgari.

Security Norms

1.

Group may consist of 10 to 20 persons-Maximum quantum of loan to the group could be Rs. 10 lakhs and minimum may be Rs. 5 lakhs. Collateral security upto Rs. 10 lakhs should be waived.

The security norms were revised in the CLCC meeting held in June'99. Norms indicated in paragraph 5.9 of the Master Circular may be followed

2.

In case of group loans, if the group is not in a position to offer its own assets as collateral security, banks may seek collateral security from individual members of the Group. Norms may be stipulated for obtaining collateral security in respect of group loans.

Collateral Security may be obtained if the prime security is not sufficient. In such a case it will be open to the bank to seek collateral from individual members of the group or others depending on the circumstances of the case. Bankers are free to decide.

Subsidy

1.

RPCD.BC.6/568(A)(P) dated 10.7.91 permits the principal branches in a district to allow overdrawing to the extent of 10% of total subsidy allocated for the year. The limits for each bank is decided in the meeting to finalise physical financial target whether the said guidelines under IRDP would hold good for SGSY. If so, the latest position in the matter.

The same instructions will hold good under SGSY.

2.

What will be the subsidy component in multiple doses of credit involving Minor Irrigation Project where there is no monetary ceiling?

There is no ceiling on subsidy in respect of minor irrigation project even in case of multiple doses of credit for individual as well as for group loans. (Refer para IX of circular dated 1.9.99)

3.

Detailed guidelines for implementation of back-end subsidy together with terms and conditions governing creation of subsidy deposit in the form of Subsidy Reserve Fund A/c. its adjustment etc. may be circulated.

Refer to para 4.17 and 4.24 of Government of India guidelines for details on back-end subsidy. The terms and conditions of the back-end subsidy are the same as under IRDP.

Post Credit Follow-up

1.

(a) In case of non procurement misutilisation of loan whether the civil criminal action can be initiated?

(b) If only criminal then FIR is to be filed jointly by the Bank and DRDA. At present, civil action cannot be initiated in Government sponsored programmes.

Reference is invited to para 4.10 of Government of India guidelines.

2.

If Swarozgari does not purchase the .assets within one month from the date of release of the amount by the bank, what steps should be initiated and how to recover the loan amount from the Swarozgari?

The reasons for non procurement should be looked into by the bank/BDO. If the non-procurement of assets is wilful or due to negligence of the Swarozgari, after giving reasonable opportunity for procurement the bank is free to cancel the loan and recover the money.

Risk Fund for Consumption Credit

1.

10% of consumption loans disbursed by banks could be provided out of Risk Fund at District Level for Swarozgaris from Weaker Section. Whether this 10% is subsidy or repayable loan.

The banks will get 10% of the consumption credit disbursed by them during the year from DRDA to maintain a risk fund. The fund enables the bank to write-off consumption loans which have become irrevocable.

2.

At what point of time consumption credit is to be disbursed and whether any separate application form/security document is required to be obtained or it should be included within SGSY application form and limit will be inclusive of consumption loan limit.

Swarozgaris (other than Self Help Group members) may be considered for consumption loan not exceeding Rs. 2,000/-. Separate application/document would be necessary. The members of SHGs will not be eligible for consumption loan, it is open for the SHGs to meet this from the cash credit facility.

3.

Modalities of opening/applying for the risk fund may be elaborated. Who will be the implementing agency for this fund and what does it cover?

Risk Fund is to be constituted by banks to cover the risk arising out of loans sanctioned for consumption purposes to Weaker Section including SGSY borrowers, small marginal farmers, landless agricultural workers, rural artisans etc. (para 4.30 of SGSY guidelines). The modalities are available in Annexure XXI of IRDP Manual.

Repayment of Loan

1.

Does the 'number of instalments' and 'repayment' have the same meaning?

The repayment period varies according to the activity taken up. Number of instalments would, therefore, depend on the amount of loan, interest liability and the repayment period (i.e. 5, 7 and 9 years as the case may be) of the activity for which the loan has been given. This will be part of the Project Profile.

2.

What is prompt repayment period to entitle for the waiver of 0.5% processing-cum-monitoring fee. If waived, how further payment may be made?

So long as the loan repayment has not been delayed by the Swarozgari beyond a schedule of time limit (with grace period) for repayment instalment the account may be considered as regular. The processing-cum-monitoring fee could be waived in the last instalment.

3.

In case the loan is fully repaid before certain period specified i.e. lock-in-period, the borrower is eligible for pro-rata subsidy. The working of pro-rata needs elucidation.

Working of pro-rata subsidy for SGSY repayment is enclosed.

4.

Income of beneficiary necessarily crosses Rs. 2,000/- p.m. net of bank instalment, after taking up the activity or at the end of third year. It may not be possible for a poor man to take up activity of such a scale which would generate cash surpluses of more than Rs. 4,000/-. District SGSY Committee may attempt to formulate comparatively bigger project which may fail for want of skill and experience.

A number of Project profiles being worked out in the field and the feedback from the States indicate that this can be achieved.

Recovery

1.

Incentive and disincentive for recovery. Whether the processing-cum-monitoring fee is to be charged as one time measure in concerned Swarozgaris accounts or whether it can be charged every year.

The processing-cum-monitoring fee has to be charged once at the time of disbursement of the loan.

2.

RBI circular reads: In case of default in repayment of loan by any Swarozgari, banks may adjust subsidy (including interest earned) against his dues after getting approval from Dist. SGSY Committee.

No interest is payable on the subsidy kept in Subsidy Reserve Fund A/c. and like-wise no interest is chargeable on the amount of loan representing subsidy portion. The clause "including interest earned" may be deleted from RBI circular as well as para 4.24 of Government guidelines.

3.

Whether processing charges are to be levied at the time of disbursement or at the time of referring the case to NGO for assistance in recovery and monitoring. Whether it has to be refunded in case of prompt recovery?

The processing-cum-monitoring charges may be levied at the time of disbursement of loan and refunded i.e. adjusted towards the repayment in the last instalment since the repayment position will be known towards the end.

4.

A benchmark level of recovery should be maintained at each village/block and banks would have to review about further lending in such village/block where recovery is less than the minimum level.

The banks have been requested to prepare the defaulters list by end of September 1999. The matter will be reviewed at the appropriate time. For SGSY, minimum recovery levels should be 80%.

Supervision & Monitoring

1.

In some States, the quarterly meetings of Block Committees under SAA are being turned into SGSY Committee meetings, thus defeating the purpose for setting up separate fora under SGSY at Block/Dist. Level.

The issues relating to SGSY are to be taken up for discussion in the Block and District SGSY committees. SGSY has specific committees because it requires special attention. The need for separate committees on SGSY exists at least for the first 2-3 years so that issues can be discussed threadbare.

2.

Convenors at all levels except at District level are Government officials - LDM is the convenor at District level forum. In view of this and for meaningful co-ordination between the agencies, convenor at district level be changed and District level government official may be nominated as convenor District SGSY Committee.

There is no change in the existing position.

3.

It has been suggested that Block level SGSY Committee monthly meetings of that month and quarterly BLBC meetings be synchronised to enable the LDO to attend them on selective basis.

LDOs may attend the Block level SGSY meetings selectively only when they attend SC/DCC meetings if the BLBC is conducted before or after.

4.

Similarly, under SGSY there is a District SGSY Committee which is akin to SC of DCC. There is need to synchronise these fora also.

The present position may continue.

Service Area Approach

1.

Under SGSY Scheme, District SGSY Committee has been empowered to allocate the villages which are either not covered by any bank branch or where concerned bank branch has not performed for any reason. Please clarify whether the reallocation of village is restricted to SGSY Scheme alone or for all other banking activities in the village and whether RBI approval is necessary.

This was discussed and decided in the CLCC. In order to ensure that such reallocation does not pose any problem at the level of implementation we have advised in para XVIII of our circular dated 1.9.1999 that the reallocation decision be referred to DCC for its consideration and necessary action.

2.

In case group loaning covering 2/3 villages, the branch having more members from its service area may finance the Group.

The Block/District SGSY Committee may decide on the basis of allocation given to each branch. Group loaning can also be decided by the BLBC/DCC/SC.

Submission of Data

1.

Segregation of Recoveries under IRDP/SGSY.

Loans disbursed up to 31 March 1999 under IRDP should be reported separately.

Items not included in RBI Circular

1.

As per Government guidelines, review of establishment of linkages is to be taken up especially on the technical support by line departments so as to decide on the continuation of financing the specific key activity - Issue has not been dealt with in RBI circular

Only the salient features of the Scheme have been highlighted in the Circular. Guidelines would continue to be the guiding feature.

Sr. No.

Name of Bank

Bank Code

Amount of Loan Sanctioned

Amount of Loan Disbursed

Amount Due for Repayment in the Month

Total Amount that should have been repaid upto the month

Total Amount Repaid so far

Group

Individual

Group

Individual

Group

Individual

Group

Individual

Group

Individual

Total

1

2

3

4

5

6

7

8

9

10

11

12

13

14

Total

Sr. No.

Name of the Swarozgari

Swarozgari Code

BPL Code

Amount Due in the Month
(in Rs.)

Amount Paid during the Month
(in Rs.)

Total Amount that should have been paid so far (in Rs.)

Total Amount Repaid
(in Rs.)

1

2

3

4

5

6

7

8

Sr. No.

Name of the SHG

Group Code

Amount Due in the Month
(in Rs.)

Amount Paid during the Month
(in Rs.)

Total Amount that should have been paid so far (in Rs.)

Total Amount Repaid
(in Rs.)

1

2

3

4

5

6

7

Bank Branch Name

Bank Branch Code

Amount of Subsidy with the Branch as on 01.04.____
(in Rs.)

Amount Released upto Last Month
(in Rs.)

Amount Released during the Month
(in Rs.)

Total Amount Available with the Branch
(in Rs.)

Amount Adjusted upto the Month
(in Rs.)

1

2

3

4

5

6

7

Sr. No.

SHG Name

SHG Code

Expenditure on Capacity Building

Contribution to Revolving Fund

Bank Branch to which Revolving Fund given

1

2

3

4

5

6

Sr. No.

Name of the Bank

Bank Code

Expenditure Incurred during the month
(in Rs.)

Amount Reimbursed by the DRDA

1

2

3

4

5