NATIONAL RURAL LIVELIHOOD MISSION NRLM 03 February 2015

NATIONAL RURAL LIVELIHOOD MISSION (NRLM) 03 February 2015, Chennai

Implementation arrangements under NRLM

State Missions – Dedicated manpower State Mission Management Unit (SMMU) 6 – 20 member team with thematic specializations District Mission Management Unit (DMMU) 6 -8 member team responsible for programme implementation at District level Block Mission Management Unit (BMMU)/ Project Facilitation Teams (PFT) 5 member team responsible for programme implementation at Block level 8 -10 Community Cadres at each Cluster (28 -40 Gram Panchayats)

Consultation mechanism with banks • Central Level Coordination Committee (CLCC) • IBA sub committee at the national level • NRLM Sub-committee under SLBC • NRLM Sub-committee under DCC • BLBC with participation of community representatives

Community Institution Architecture (250 – 300 SHGs) § Monitoring Sub Committee § Repayment Sub committee § Convergence Sub Committee CLF § SHG Monitoring Sub Committee § Bank Linkage Sub committee § Asset Verification Sub Committee § Social Action Sub Committee SHGs • CLF Accountant • Bank Mitra (15 – 25 SHGs) • VO Book Keeper • Community Facilitator V. O SHGs Self Help Groups (10 -15 members) SHGs SHG Book Keeper

Bank Linkage Mandate under NRLM “Each poor Household is able to access credit of at least Rs 1 lakh in multiple doses (over 4 -5 years)”

SHG Capitalization Strategy Step by step process From 1 st Meeting Internal Lending 2 Months SB A/C opening 3 -4 Months RF RF : Revolving Fund MCP: Micro Credit Plan CIF: Community Investment Fund 6 -8 Months MCP prepared 6 -8 Months CIF 6 -12 Months Bank Credit – 1 st Linkage 24 -30 Months Bank Credit – 2 nd Linkage 36 -40 Months Bank Credit – 3 rd Linkage

Four Banks for poor BANK CLUSTER FEDERATION VILLAGE FEDERATIO N SHG

MASTER CIRCULAR ON NRLM -Key points • Revolving Fund (RF): RF support to SHGs which are active for a minimum period of 3/6 months and ‘Panchasutra’ - Rs 10000 – Rs 15000 per SHG • Community Investment support Fund (CIF) : CIF will be provided to the SHGs in the intensive blocks, routed through the Village level/ Cluster level Federations • Capital Subsidy has been discontinued under NRLM

Lending Norms Eligibility criteria for the SHGs • SHG should be in active existence at least 6 months & following ‘Panchasutra’. • Revived SHGs are also eligible for credit if they are continue to be active for a minimum period of 3 months. • Grading as per norms fixed by NABARD. As and when the Federations of the SHGs come to existence, the grading exercise can be done by the Federations to support the Banks.

Loan amount • First dose: Rs. 50, 000 or 4 -8 times the corpus during the year whichever is higher. • Second dose: Rs. 1 lakhs or 5 - 10 times the existing corpus and proposed saving during the next twelve months, whichever is higher. • Third dose: Minimum of Rs. 2 lakhs, based on the MCP prepared by the SHGs and appraised by the Federations/Support agency • Fourth dose onwards: Loan amount can be between Rs. 5 -10 lakhs for fourth dose and/or higher in subsequent doses. The loan amount will be based on the MCP

Type of facility and repayment • SHGs can avail either Term loan or a CCL loan or both based on the need. Repayment schedule could be as follows • First dose: 6 -12 installments • Second dose: 12 -24 installments • Third dose - based on MCP - repayment either monthly/quarterly /half yearly based on the cash flow (2 to 5 Years) • Fourth dose onwards: repayment has to be either monthly/quarterly /half yearly based on the cash flow (3 to 6 Years) Security and Margin No collateral and no margin will be charged upto Rs. 10. 00 lakhs limit to the SHGs

INTEREST SUBVENTION TO SELF HELP GROUPS

Interest Subvention scheme – Credit limit Rs 3 lakhs Parameter Category-I districts Category-II districts 1 Coverage Limited to selected 150 districts 2 Eligibility All women SHGS are eligible for IS Benefit & 3 eligibility Condition SHGs will be eligible for loans from banks at upfront 7% per annum; In case of prompt repayment additional 3% IS. Thus effective interest rate is 4%. 4 Release mehanism 5 Nodal Agency Banks will be subvented Remaining 490 districts NRLM compliant women SHGs are eligible for IS available on prompt repayment only IS will be equivalent to the difference between lending rate of banks and 7% per annum SHGs will be subvented Difference between the bank's lending rate and 7% (subjected to a max. of 5. 5%) Canara Bank for PSBs & Pvt Banks NABARD for RRBs & Cooperative Respective SRLM Banks

Interest Subvention Cat. – I (150 districts) Role of Banks • Banks will lend to all women SHGs at upfront 7% per annum (upto Rs 3 lakhs) • Banks will also pay additional interest subvention of 3% to SHG loans accounts being serviced promptly • Bank will submit claims pertaining to interest subvention to Canara Bank for further submission to Mo. RD for release of claims. Role of Mo. RD & SRLMs • Mo. RD will subvent banks to as per DFS approved rate Weighted Average Interest Charged (WAIC) • SRLMs will undertake initiatives for spreading on the scheme

Weighted Average Interest Cost (WAIC) As prescribed by DFS Banks WAIC Interest to be subvented above 7% HDFC Bank 18. 00 5. 5 ICICI Bank 14. 26 5. 5 Yes Bank 20. 50 5. 5 Axis Bank 12. 68 5. 5 J&K Bank 13. 00 5. 5 Karur Vysy Bank 11. 28 4. 28 Dhanalaxmi Bank 13. 00 5. 5 Ratnakar Bank 18. 00 5. 5 South Indian Bank 14. 50 5. 5 Federal Bank 12. 70 5. 5 ING Vysy Bank 19. 05 5. 5 Indus Ind Bank No lending to WSHG NA Kotak Mahindra Bank No lending to WSHG NA Tamil Nadu Mecantile Bank No lending to WSHG NA

Interest Subvention Cat. – II (490 districts) Role of Banks • Banks will lend to women SHGs at regular lending rates • Banks to regularly share data with NRLM on loans disbursed to women SHGs directly from CB Role of State Missions • State Missions will identify ‘NRLM Compliant SHGs’ • Based on the data shared by banks, promptly repaying SHGs will be identified. • State Missions will transfer the amount of interest subvention directly to SHG loan a/c.

SHG Bank Linkage How are Private Banks performing?

Share in Credit disbursement to SHGs (FY 13 -14) 7% 26% 59% 8% Public Sector Banks Private Sector Banks Regional Rural Bank Cooperative Bank

Region-wise penetration by Pvt Banks (2013 -14) 4, 67% 12, 58% 1, 21% 81, 54% Northern Region Western Region Central Region Southern Region

Growth in disbursement of loan by Pvt Banks 87976 90000 80000 No. of SHG Linked 2500 1923, 62 69843 70000 60000 1500 1293, 33 50000 40000 30000 20000 10000 2000 1000 29557 500 546, 78 0 0 2011 -12 No. of SHG Linked Loan Amount 2012 -13 2013 -14 Loan Amount (Rs Cr) 100000

Average loan Size to SHGs Amount of Credit Per SHG (Rs) 250000 200000 218652 184991 185176 2011 -12 2012 -13 150000 100000 50000 0 2013 -14

SHGs Bank Linked S. No. 1 2 3 4 5 6 7 States TAMIL NADU KARNATAKA RAJASTHAN KERALA MP MAHARASHTRA GUJARAT Total Estimated no of SHGs 6, 36, 000 5, 000 2, 31, 763 2, 29, 964 1, 59, 457 6, 87, 717 2, 08, 410 26, 53, 311 No. of SHGs % of SHG having Loan Share of Pvt having loan o/s Banks outstanding (Mar 2014) 4, 46, 671 70% 10% 3, 37, 196 67% 6% 1, 29, 830 56% 8% 1, 17, 303 51% 18% 81, 030 51% 6% 2, 04, 355 30% 12% 61, 848 30% 3% 13, 78, 233 Source: Status of Microfinance 2013 -14, NABARD

SRLM - Promotion of SHG & Fedn - Capacity Building of CBOs - Financial literacy, counselling services on savings, credit and Micro-investment Planning - Placement of Bank Sakhi - Institutionalizing CBRM for ‘Zero NPA’ NRLM 1. Policy Formulation 2. Project Financing 3. Technical Support Pvt Banks SHG - Opening of SB a/c - Channeling benefits to SHG & members – Community Funds/ Interest Subvention/ other entitlements - Credit Linkage of SHGs

Expectation From Private Sector Banks • Much greater Partnership with SRLMs for lending to women SHGs • Data sharing on loan disbursed to women SHGs on monthly basis. • Assign following codes to all accounts of SHGs • Unique code for Women SHGs – Assign gender based codes for SHGs-Male, Female as well as mixed irrespective of promoting agency • Unique code for NRLM – For both S/B and loan accounts of women SHGs • channel Interest Subvention benefit for Women SHGs

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