Government of India launched Swarnjayanti Gram Swarozgar Yojana (SGSY) scheme after restructuring the Integrated Rural Development Programme (IRDP) from April 1, 1999 in the rural area of the country. SGSY was effective up to 31st March 2013. The Ministry of Rural Development, Government of India launched a new programme known as National Rural Livelihoods Mission (NRLM) by restructuring and replacing the Swarnjayanti Gram Swarozgar Yojana (SGSY) scheme with effect from April 01, 2013.
NRLM was renamed as DAY-NRLM (Deendayal Antyodaya Yojana -National Rural Livelihoods Mission) w.e.f. March 29, 2016 and is the flagship program of Govt. of India for promoting poverty reduction through building strong institutions of the poor, particularly women, and enabling these institutions to access a range of financial services and livelihoods services.
Reserve Bank of India vide its Master Circular RBI/2022-23/92, FIDD.GSSD.CO.BC.No.09/09.01.003/2022-23 dated July 20, 2022 has updated the same by incorporating the instructions on DAY-NRLM issued upto September 18, 2020. The latest guidelines on Interest Subvention Scheme for the year 2020-21, as advised by Ministry of Rural Development (MoRD), Government of India, have been incorporated in the Master Circular for implementation.
Objective: DAY-NRLM is designed to be a highly intensive program and focuses on intensive application of human and material resources in order to mobilize the poor into functionally effective community owned institutions, promote their financial inclusion and strengthen their livelihoods.
Poverty reduction by building strong institutions of the poor (particularly women) and enabling these institutions to repeatedly access, a range of financial services (particularly bank loans) till they attain sustainable livelihood.
The blocks and districts in which all the components of DAY-NRLM will be implemented, either through the SRLMs (State Rural Livelihood Mission) or partner institutions or NGOs, will be the intensive blocks and districts, whereas remaining will be non-intensive blocks and districts.
Women SHGs and their Federations: Feature of women SHG Group are as under;
- Women SHGs under DAY-NRLM consist of 10-20 persons. In case of special SHGs i.e. groups in the difficult areas, groups with disabled persons, and groups formed in remote tribal areas, this number may be a minimum of 5 persons.
- DAY-NRLM promotes affinity-based women Self -help groups.
- Only for groups to be formed with Persons with disabilities, and other special categories like elders, transgender, DAY-NRLM will have both men and women in the self-help groups.
- SHG is an informal group and registration under any Societies Act, State cooperative Act or a partnership firm is not mandatory. However, Federations of Self Help Groups formed at village, Gram Panchayat, Cluster or higher level may be registered under appropriate acts prevailing in their States.
These financial assistance will be provided to the SHGs.
Revolving Fund (RF): DAY-NRLM would provide Revolving Fund (RF) support to SHGs in existence for a minimum period of 3 to 6 months and follow the norms of good SHGs, if they follow ‘Panchasutra’ :–
- Regular meetings,
- Regular savings,
- Regular internal lending,
- Regular recoveries and
- Maintenance of proper books of accounts.
Only such SHGs that have not received any RF earlier will be provided with RF, as corpus, with a minimum of ₹ 10,000 and up to a maximum of ₹ 15,000 per SHG. The purpose of RF is to strengthen their institutional and financial management capacity and build a good credit history within the group.
Capital Subsidy has been discontinued under DAY-NRLM: No Capital Subsidy will be sanctioned to any SHG from the date of implementation of DAY-NRLM.
Community Investment support Fund (CIF): CIF will be provided to the SHGs in the intensive blocks, routed through the Village level / Cluster level Federations, to be maintained in perpetuity by the Federations. The CIF will be used, by the Federations, to advance loans to the SHGs and / or to undertake the common / collective socio-economic activities
Role of banks: Banks have to open Savings Bank accounts for all women SHGs, SHGs with members of Disability and the Federations of the SHGs. SHGs and their federations may be encouraged to transact through their respective saving account on regular basis. The KYC norms specified by RBI are applicable for identification of the customers. Eligibility Criteria:
- SHG should be in active existence for minimum 6 months;
- Practicing ‘Panchasutras’;
- Existing defunct SHGs are eligible if they are revived and continue to be active for a minimum period of 3 months.
Lending Norms: Emphasis is laid on the multiple doses of assistance under DAY-NRLM. This would mean assisting an SHG over a period of time, through repeat doses of credit, to enable them to access higher amounts of credit for taking up sustainable livelihoods and improve on the quality of life. SHGs can avail either Term Loan (TL) or a Cash Credit Limit (CCL) loan or both based on the need. In case of need, additional loan can be sanctioned even though the previous loan is outstanding.
The amount of credit under different facilities should be as follows:
Cash Credit Limit (CCL): In case of CCL, banks are advised to sanction minimum loan of ₹ 6 lakh to each eligible SHGs for a period of 3 years with a yearly drawing power (DP). The drawing power may be enhanced annually based on the repayment performance of the SHG. The drawing power may be calculated as follows:
DP for First Year: 6 times of the existing corpus or minimum of ₹ 1.50 lakh whichever is higher.
DP for Second Year: 8 times of the corpus at the time review/ enhancement or minimum of ₹ 3 lakh whichever is higher.
DP for Third Year: Minimum of ₹ 6 lakh based on the Micro credit plan prepared by SHG and appraised by the Federations /Support agency and the previous credit History.
DP for Fourth Dose onwards: Above ₹ 6 lakh, based on the Micro credit plan prepared by the SHGs and appraised by the Federations /Support agency and the previous credit History.
Term Loan: In case of Term Loan, banks are advised to sanction loan amount in doses as mentioned below:
First Dose: 6 times of the existing corpus or minimum of ₹ 1.50 lakh whichever is higher.
Second Dose: 8 times of the existing corpus or minimum of ₹ 3 lakh whichever is higher.
Third Dose: Minimum of ₹ 6 lakh based on the Micro credit plan prepared by the SHGs and appraised by the Federations / Support agency and the previous credit History.
Fourth Dose: Above of ₹ 6 lakh based on the Micro credit plan prepared by the SHGs and appraised by the Federations / Support agency and the previous credit History.
Banks should take necessary measures to ensure that eligible SHG are provided with repeat loans. Banks are advised to work with DAY-NRLM to institutionalize a mechanism for online submission of loan application of SHGs for tracking and timely disposal of application.
Credit facilities to SHG members: Loan to individual SHG members may be provided subject to;
(i) In order to facilitate women SHG members to graduate to entrepreneurs, banks may consider extending loans up to ₹ 10 lakh to individual members of select matured well performing SHGs (SHGs which are more than 2 years old and have accessed at least one dose of bank loan with timely repayment) as per their lending policy. The individual should be running a viable economic enterprise. Banks are advised to share data on individual loans to women SHGs members in a mutually agreed format and periodicity with DAY-NRLM.
(ii) One woman in every SHG under DAY-NRLM may be provided a loan up to ₹ 1 lakh under the MUDRA Scheme, if she is otherwise eligible.
(iii) Banks are advised to provide minimum OD facility of ₹ 5000 to every woman SHG member having PMJDY account in accordance with the guidelines issued by Indian Banks’ Association (IBA). Banks may regularly share data on OD limit to women SHGs’ members in a mutually agreed format and periodicity with DAY-NRLM.
Purpose of loan and repayment: The loan amount will be distributed among members based on the Micro Credit Plan prepared by the SHGs. The loans may be used by members for meeting social needs, high cost debt swapping, construction or repair of house, construction of toilets and taking up sustainable livelihoods by the individual members within the SHGs or to finance any viable common activity started by the SHGs.
In order to facilitate use of loans for augmenting livelihoods of SHG members, it is advised that at least 50% of loans above ₹ 1 lakh, 75% of loans above ₹ 4 lakh and at least 85% of loans above ₹ 6 lakh be used primarily for income generating productive purposes. Micro Credit Plan (MCP) prepared by SHGs would form the basis for determining the purpose and usage of loans.
Repayment Schedule: Repayment of loan schedule for Term Loan may be as under;
1st dose- repaid in 24-36 months in monthly / quarterly installments;
2nd dose- repaid in 36-48 months in monthly / quarterly installments;
3rd Dose- repaid in 48-60 months in monthly / quarterly installments;
4th dose- repaid between 60-84 months based on the cash flow in monthly / quarterly installments.
Security and Margin: No collateral and no margin will be charged up to ₹ 10.00 lakh limit to the SHGs. No lien should be marked against savings bank account of SHGs and no deposits should be insisted upon while sanctioning loans.
For loans to SHGs above ₹ 10 lakh and up to ₹ 20 lakh, no collateral should be obtained, and no lien should be marked against savings bank account of SHGs. However, the entire loan (irrespective of the loan outstanding, even if it subsequently goes below ₹ 10 lakh) would be eligible for coverage under Credit Guarantee Fund for Micro Units (CGFMU).
For loan to SHGs above ₹10 lakh and up to ₹20 lakh, a margin not exceeding 10% of the loan amount exceeding ₹10 lakh may be obtained as per the bank’s approved loan policy.
Asset Classification: All facilities sanctioned under DAY- NRLM would be governed by the Asset Classification norms issued by Reserve Bank of India from time to time.
Dealing with Defaulters: Non-willful defaulters should not be debarred from receiving the loan. Willful defaulters should not be financed (Willful defaulters’ members of a group can be allowed to benefit from the thrift and credit activities of the group including the corpus built up with the assistance of Revolving Fund).