ROLE OF BANKS
in
NRLM
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BACKGROUND
Positive experience in lending to women’s self
help groups by Banks.
Expertise of banks in Training & Skill Building
through RSETIs
Successful implementation of Financial Inclusion
by Banks
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BACKGROUND
RBI defines financial inclusion as providing access
to appropriate financial products and services to
the most vulnerable group of the society in a fair,
transparent and cost-effective manner by the
mainstream financial institutions.
Making poor the preferred clients of the banking
system is core to the NRLM financial inclusion
strategy.
Mobilization of bank credit is crucial for
accomplishing investment goals under NRLM.
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Role Of Banks
WHEN: Right from inception of the program.
WHAT: Open Savings Accounts for all beneficiaries
Providing all kind of Banking Services
Finalisation of KYC norms through SLBC
Providing desired finance at affordable
price with suitable repayment
Providing continuous finance to SHGs
their federations
&
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Role Of Banks
HOW: To follow financing norms applicable to SHGBank linkage programme as agreed in SLBC
Maintain minimum subsidy-loan ratio of 1:2
Capital Subsidy is front end subsidy & to be
applied alongwith Bank Loan
Interest subsidy being the difference between
the interest rate charged by the bank and 7%
p.a. to BPL SHGs who are regular in repayment
of bank dues.
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Role Of Banks
Salient Features of Bank Finance:
NRLM to be treated as mainstream business
opportunity and view SHGs formed under the program
as business clients by Banks
To adopt a Rating Index (like the index developed by
NABARD) as appraisal tool for assessing credit
worthiness of Self Help Groups, which broadly covers
the Panchasutras.
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Role Of Banks
Salient Features of Bank Finance:
Financing under NRLM in two forms.
1.Direct credit assistance to Self Help Groups or
through their federations against their Micro Investment
Plans covering variety of livelihoods activities, including
social needs.
2.Financing SHGs or their Federations for specific
economic activities on cluster basis.
SLBC may bring consensus on eligibility of groups, size
& tenor of loans
Bank loans under NRLM will be treated as advances to
weaker sections
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Role Of Banks
Sanction and disbursement :
Bank to decide the loan quantum and other conditions
of the loan in a transparent manner after discussing with
group members the Micro Investment Plan prepared by
them.
Loan to be sanctioned in a reasonable period of time
(15days) from the date of receipt of applications.
The loan disbursements shall be made in cash.
Post disbursement scrutiny and monitoring:
Bank linkage will monitor repayment of bank loans.
Banker will also undertake periodic visits to Self Help
Groups.
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Role Of Banks
Special Roles for Banks under NRLM:
Transforming unemployed youth into confident self
employed entrepreneurs through a short duration
experiential learning program followed by systematic long
duration hand holding support.
Trainings to build entrepreneurship qualities improve self
confidence, reduce risk of failure and develop them into
change agents.
Complete involvement of the banks in selection, training and
post training follow up stages.
NRLM will encourage public sector banks to set up Rural
Self Employment Training Institutes (RSETIs) in all districts
of the country
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Role Of Banks
Special Roles for Banks under NRLM:
Financial literacy and business counselling services
Improving the service quality of bank branches to poor
clients by positioning dedicated customer relationship
managers (Bank Mitra)
Specialized teams for business development and
origination services, monitoring and recovery of loans to
SHGs and Federations
Developing and delivering new savings, credit,
remittance and insurance products with and through
institutions of the poor.
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Role Of Banks
Special Roles for Banks under NRLM:
Extending banking outreach to all villages with population
exceeding 2,000 by leveraging IT and mobile based
financial technologies and using institutions of poor as
business facilitators and business correspondents
Business process re-engineering to take advantage of
Core Banking Solutions and other financial technologies.
Networking electronic payment points with branch
network or backed by call centres and business
processing cells
Creating specialized NRLM Cells for review and
coordination in each controlling office of the participating
bank
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Role Of Banks
SLBC –Sub Committee for SHG-Bank linkage &
implementation of NRLM including planning,
coordination, monitoring & review of FI
DLCC –
1. Monitoring and review of the overall progress in
physical and financial terms
2. Sorting out inter-agency differences and to prepare
items for consideration of SLBC
3. Assessing training needs of beneficiaries and also to
review the arrangements for training including
identification of appropriate institutions
4. Monitor the recovery position bank-wise and block-wise
so as to initiate corrective measures where necessary.
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