Guide / Toolkit

Banking with Self Help Groups - How and Why? A Handbook for Branch level Bankers

Presenting an overview of SHGs and their relevance to the banking sector
Download 34 pages

The paper introduces the basics of self-help groups (SHGs), their operations and relevance for the banking sector. It presents the fundamentals of the operational relationship between banks and SHGs. The paper gives an overview of the following processes with regard to the SHGs:

  • Formation;
  • Functioning, including information on the requisite size, membership, meetings, book of accounts etc.;
  • Linkage with banks;
  • Operating the bank account.

The paper presents a checklist which can guide bankers in loan release to SHGs. It presents guidelines for release of credit:

  • Deciding the quantum of the loan;
  • Deciding the rate of interest for the loan;
  • Dealing with defaults;
  • Lending to NGOs for on-lending to SHGs.

The paper lists the various advantages of banking with SHGs and the requisite steps in the quality control of SHGs. The paper also provides the format of documents required for recognizing and lending to SHGs.

About this Publication