group loan
Self Help Groups
A ‘self-help group’ consists of around 10-20 members from the same area with a similar socio-economic background. They come together to achieve a common goal – sustainable economic development, achieved by sharing concerns, supporting each other, solving problems in a democratic manner and a joint decision-making process.
Step 1:
Receipt of Loan Application
The prescribed loan application documents are prepared by a representative of the group, containing the SHG loan fund request, copy of SHG resolution, borrower-specific loan requirement amount and related purpose.
Step 2:
CB Check
The credit officer gives an acknowledgement receipt for the loan application stating the status and communicates within 15 days of receipt of the loan application
Step 3:
Screening by Credit Officer
This is done within 3 days from the receipt of application in the presence of all members. Adequate quorum, assessment of need, repayment capacity and maintenance of accounts helps to check the repayment history and eligibility of the borrower. The M1, M2 and A & R training is to be completed within one month of group formation and the rejection reason must be properly communicated.
Step 4:
Rating by Branch Manager
Branch Manager assesses the creditworthiness of the group and rates them on the basis of prescribed parameters. Only those scoring above 60% marks are eligible for the loan.
Step 5:
Risk Assessment Team Check
SHGs are allotted to the RATs to mitigate the risk of providing the loan to ineligible candidates. The RAT checks the compliance of other processes and presents a detailed report against given parameters.
Step 6:
Sanction / Rejection Communication
Sanction to be issued within 15 days of receipt of the loan application. Rejection cases are to be issued with a rejection letter stating reasons.
Step 7:
Disbursement and Post-disbursement
Disbursement is done through direct bank transfers, and a post-disbursement check is to be done within 60 days from disbursement, and the inferences are to be recorded.
Step 8:
Repayment by SHGs
The loan passbook is provided to the SHG and individual members. Repayments are made only at the branch office and the details are recorded and signed off by the Branch Accountant after receipt is provided.
Step 9:
PortfolioMonitoring
Collection reports are put together on a daily basis from the branch office for calculating financial ratios.