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National Bank for Agriculture and Rural Development
micro Credit innovation Department
Head Office: Plot No.24, G Block,
Bandra Kurla Complex, Bandra {E), Mumbai-400 051
Tel:+91 22 26530084 Fax: +91 22 2652 8141
E-mail: [email protected] Website: www.nabard.org
Ref.no. NB.MCID/1563/SHG-1(Policy)/ 2011-12
Circular No: 65(A)/ MCID-04 / 2011-12
27 March 2012
The Chairman/ Managing Director/
Chief Executive Officer
All Scheduled Commercial Banks / RRBs / SCBs
Dear Sir
SHG2: Revisiting the SHG Bank Linkage Programme
Characteristic features of Self-Help Groups (SHGs) and the norms for their linkage with banks
were first enumerated in the guidelines of NABARD circular dated 26 February 1992. Two
decades hence the SHG-Bank Linkage Programme (SHG-BLP) continues to be the mainstay of the
Indian microFinance scene with 74 lakh SHGs covering over 10 crore households saving with the
formal banking system with savings balance of over Rs. 7, 000 crore as on 31 March 2011. About
49 lakh of these SHGs have also accessed bank credit and have over Rs 31,000 crore as
outstanding credit from the banking system. In other words, the SHG-BLP has so far been the
most preferred and viable model for financial inclusion of the hitherto unreached poor.
2. However, despite the unique characteristics of SHGs and noteworthy accomplishments, the
following issues continue to affect the programme in many areas;
inadequate outreach in many regions,
delays in opening of SHG accounts and disbursement of loans,
impounding of savings by banks as collateral,
non-approval of repeat loans even when the first loans were repaid promptly,
multiple membership and borrowings by SHG members within and outside SHGs and
limited banker interface and monitoring
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Taking Rural India >> Forward
1
3. Product level changes: SHG2
While the basic tenets of the SHGs being savings led credit product remain true even today
(Annexure 1), many recent developments require crucial changes in the approach and design of
SHG-BLP to make it more flexible and client friendly. The following guidelines of SHG2 are
suggested to enable financing banks to respond to the changing requirements of members of
SHGs:
3.1 Allowing voluntary savings:
a) Presently, SHGs save fixed amounts as compulsory savings in weekly/ fortnightly / monthly
meetings.
b) Growth in rural economy and opportunities like MNREGS and other schemes has positively
influenced the SHGs and their members capacities to save.
c) While many SHGs and their members have enhanced the amount of compulsory savings over
the years
1
; the compulsory savings in the SHGs are often restricted to the lowest savings
potential of a member of SHG.
d) It has been observed that the savings capacity and potential varies across members.
Therefore, the concept of voluntary savings by members over and above the compulsory
savings provides an opportunity for banks.
e) It is desirable that such SHG members are encouraged to open individual bank accounts
/revive their existing no frill accounts by depositing the surplus so as to facilitate them to
steadily graduate from community banking to individual banking.
f) However, until the members of SHGs graduate to the level of opening and maintaining
individual bank accounts, there is a need to create a suitable alternate framework within the
group. SHG members with greater savings potential may be allowed to park their surplus
fund within the group in the form of voluntary savings over and above the compulsory
savings mandated in the group and a suitable accounting system may be started in the SHG
for this purpose.
g) Voluntary savings can be reckoned in two ways; (1)not forming a part of the group corpus (2)
as a part of group corpus and utilized for intra group lending. In case of (2), it will also be
reckoned for assessing the quantum of loan to the group from bank. However, it is desirable
that the additional savings by group members does not entitle the concerned members to
seek proportionately higher dosage of credit for themselves. The SHGs should have freedom
to decide as to whether the voluntary savings by members of the group are eligible for
proportionate share in the interest income or dividend from the group.
1
eg; Rs 50 per month per member in the first two years raised to Rs 100 per month/ member in year 3-4 and so on.
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Taking Rural India >> Forward
2
h) The suggested approaches of capturing voluntary savings of the members of SHGs need to
be introduced with commensurate financial education of SHGs.
3.2. Modifications in credit product
3.2.1 Purpose of bank loan
Loan granted by the bank to the SHG is purpose neutral as the group decides the purpose for
which loan can be given to its members. As indicated by RBI in its circular (Ref: RPCD. FID.
BC.No.06/ 12.01.001/ 2011-12 dated 1 July, 2011) the banks are expected to meet the entire
credit requirements of SHG members for (a) income generation activities, (b) social needs like
housing, education, marriage, etc., and (c) debt swapping, etc.
3.2.2 Cash Credit / overdraft for SHGs
a) There are instances of non-sanction of repeat loans to SHGs, as also cases of limiting
need based credit. Sanction of a cash credit / overdraft system of lending for SHGs for a
longer operational tenure may therefore be adopted to overcome these issues and to
permit SHGs to have larger loans in tune with increasing pooled savings.
b) This approach will provide considerable flexibility to SHGs in meeting their frequent
needs as well as help them in reducing their cost of borrowings.
c) The loan limit may be sanctioned for a period of three to five years based on the
projected savings of the SHGs upto the end of 3 to 5 years, thus avoiding repeated
documentation. Drawable limits for each year can however, be fixed within this
aggregate ceiling as a multiple of actual pooled savings reached (Annexure 2).
d) Although the approach has been in operation in certain States and has found reasonable
acceptance among the banks and SHG clients, apprehensions are mooted by some that
such an approach could drive to financial indiscipline at the SHG level and lead to over-
borrowing and potential defaults. The following measures may therefore be adopted:
Though the cash credit facility is to be sanctioned by the bank to SHG; the sanction of
credit by SHG to its individual members will be guided as per their terms and duration as
decided by the groups. This is expected to remain unchanged and thus ensure
continuance of financial discipline at the member level.
Further, in order to ensure that the financial discipline is maintained between the SHG
and the banks, banks may insist for servicing of interest at monthly rests.
Besides servicing interest, the bank may also introduce appropriate prudent mechanisms
for review and continuance of limit by ensuring that all or part of the principal drawals is
repaid in an operational year. Similar to approaches applicable in KCC, the bank could
insist that every drawal be repaid within twelve months from the date of drawal or insist
for turnover of atleast 25-30% of the principal drawn in the first half of the year while
reviewing the operations of the credit limit. (Annexure 2: illustrations).
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Taking Rural India >> Forward
3
Banks approving repeat cycles of cash credit to SHGs may sanction larger credit approvals
beyond a multiple of four times of SHGs corpus. These approvals may be done based on
the performance review of existing operations, actual growth in SHGs own corpus and
the debt servicing history and capacity of SHG.
In mature SHGs that have been supported with a few cycles of credit; the requirement of
credit for purchase of capital assets, etc would increase. This would necessitate that the
bank approves a different type of credit accommodation like term loans to these groups
in addition to the cash credit limit.
3.3 Enabling Joint Liability Groups (JLGs) within SHGs
a) A few members of an SHG may graduate faster to start or expand economic activities
requiring much higher levels of loans than required by other SHG members. In such cases,
the other members may not like to stand mutual guarantee for a few large sized loans.
b) In such cases, a smaller Joint Liability Group (JLG) from members of an SHG may be
created. The members of JLG will continue to remain members of the SHGs and continue to
participate in the activities of SHGs are earlier.
c) Banks may encourage creation of such enterprise / livelihood based JLGs as a separate
entity. Banks may use financial and other support extended by NABARD for this purpose.
d) These JLGs may be created and financed by the bank on the lines of NABARD guidelines on
JLGs already in vogue (Ref: Annexure 3) and such financing would be in addition to the loan /
credit limit to the SHG.
3.4 Improving Risk Mitigation Systems
In order to further strengthen the bankers comfort and confidence in financing of SHGs, a few
risk mitigation mechanisms, viz; self-rating tools by SHGs, conduct of audits at SHG level, etc are
recommended.
a) The self-rating mechanism by SHGs is intended to educate SHG members of their strengths
and weakness in an SHGs functioning for initiating corrective action.
b) Audit in SHGs is a third party assessment of SHGs operations while keeping SHGs own
functioning free and flexible. Audit, inter alia, should cover aspects like regularity in
meetings, savings, internal lending process, correctness of interest application, accounting
for all receipts and payments, drawing out final accounts of SHGs, etc. The audit may be
informal in nature, but be made compulsory for credit expansion beyond the normal limit of
four times of the savings of SHGs.
c) Banks could source SHG-level Business Facilitators (Auditors) from amongst active SHG
members or NGOs or other agencies, which promote SHGs, or existing BCs of the bank to
enable the audit process in SHGs.
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Taking Rural India >> Forward
4
3.5 Building second tier institutions
a) Experience gathered over the years in promotion and nurturing of SHGs suggests the need
for a much longer and sustained hand holding by SHG Promoting Institutions (SHPIs) to
ensure SHGs sustainability.
b) Members of well functioning or active members of SHGs and NGOs or other entities engaged
in promotion of SHGs best provide these support services to SHGs. Such entities may be
engaged by banks to serve as Business Facilitators for helping the bank monitor the
functioning of SHGs and take corrective action.
c) Besides nurturing SHGs and conducting their audits, they could also facilitate financial
literacy, help SHG members to open individual savings accounts, guide and improve existing
livelihoods.
4 Strengthening the monitoring mechanism
RBI and NABARD have reiterated that banks consider lending to SHGs as part of their
mainstream operations. Considering the growth in SHG financing already achieved as well as the
future potential, it is essential that SHG and JLG financing finds an appropriate place in the
banks corporate and strategic plans. Financing banks should also strengthen their monitoring of
SHGs and capture SHG data through their CBS platforms.
5 Addressing Training requirements
Considering the magnitude of training requirements of bank officers both at field level and
controlling office level, banks may initiate suitable steps through their training establishments.
NABARD would be keen to support and organise Bank specific programmes for branch level staff
as also suitable awareness programmes for its middle level / senior officials. Specific requests for
the same can be made to our Regional offices.
Yours faithfully
Sd/-
(S K Mitra)
Executive Director
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5
Annexure 1
Basic features of SHGs
Size of the SHG: SHGs are small informal group of 10-20 individuals promoting savings habit
among members. However, in hilly tracts / regions and predominantly tribal dominated areas
where communities are dispersed, smaller groups of less than 10 are also formed into SHGs. The
internal savings mobilised by the group are then lent by it to its members for emergent needs or
such purposes as decided by the group.
Opening of savings bank account: The SHGs, which are informal and unregistered groups
engaged in promoting savings habits among their members would be eligible to open savings
bank accounts with banks (Ref: RBI circular letter DBOD. No. BC. 63/13.01.89/92-93 dated 4
January, 1993). These SHGs need not necessarily have availed of credit facilities from banks
before opening savings bank accounts.
Characteristics of the SHG: Some of the basic characteristics for provision of credit by the bank
to the group are 1) should have been in active existence for atleast a period of six months, 2) it
should have successfully undertaken savings and credit operations from its own resources 3)
should be democratic working, wherein all members feel that they have an equal say and it
should be evident 4)the group is maintaining proper accounts/records 5) banker should be
convinced that the group has not come into existence only for the availing benefits and there
should be genuine need to help each other and work together among the members 6) SHG
members should preferably have homogeneous background and interest.
Margin and Security Norms: As per the existing operational guidelines, SHGs may be sanctioned
savings linked loans by banks (varying from a saving
2
to loan ratio of 1:1 to 1:4). However, in case
of matured SHGs, loans may be given beyond the limit of four times the savings as per the
discretion of the bank. However, the Banks may make the credit decision on the basis of certain
objective parameters such as proven track record, savings pattern, recovery rates, credit history,
housekeeping, etc.
Documentation: Keeping in view the nature of lending and status of borrowers, the banks
normally prescribe simple documentation for lending to SHGs. Three basic documents which
were prescribed for use of banks were 1) an inter-se agreement to be executed by the
members of the SHGs, 2) a loan application to be submitted by SHGs, model loan agreement
3) introductory cum sponsorship letter from NGO/SHPI.
Presence of defaulters in SHGs: The defaults by a few members of SHGs and/or their family
members to the financing bank should not ordinarily come in the way of banks financing SHGs
provided the SHG has not defaulted to it. However, the bank loan may not be utilized by the
SHG for financing a defaulter member to the bank.
2
It is also often termed as corpus of the SHG, which, inter alia, include the savings, mobilised by SHG members, the interest earned by
inter-loaning by the SHG, penalties or such other resources of the SHG. The corpus, which is reckoned as a multiple for loan sanctions
should be based on the balances in the books of the SHG and NOT balances maintained by SHG with the bank.
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Taking Rural India >> Forward
6
Annexure II
Example No. 1
Fixation of Cash Credit Limit [CCL] and Drawing Power [DP] to SHG
1. 1. Name of the SHG : Parvati Svayam Sahayata Samooh [SHG]
2. No. of SHG members : 15
3. Periodicity of meeting and savings : once a month
4. Monthly savings amount of each
SHG member : Rs.100/-
5. Total monthly savings by the group : Rs.100 x 15 = Rs.1500/-
6. Projected savings of the group
after 3 yrs : Rs.1500 x 36(month) = Rs.54,000/-
7. Four times of saving at the end
of 3 years can be sanctioned as CCL : Rs.54,000 x 4(times) = Rs.2,16,000/-
8. Date of formation of SHGs with holding first meeting and saving of the group :
01.07.2008
9. CCL sanctioned after six month on
01.01.2009 for a period of three yrs : Rs.2,16,000/-
10. Fixation of Drawing Power [DP] assuming that the group saves regularly
a] * DP for 1st year from 01.01.2009 to 31.12.2009
* Savings as on 31.12.2008 : Rs.1500 x 6 (month) = Rs,9,000/-
* DP may be two times of the corpus : Rs.9000/- x 2(times) = Rs.18,000/
b] * DP for 2
nd
year from 01.01.2010 to 31.12.2010
* Savings as on 31.12.2009 : Rs.1500 x 18 (month) = Rs.27,000/-
* DP may be three times of the corpus : Rs.27,000 x 3 (times) = Rs.81,000/-
c] * DP for 3
rd
year from 01.01.2011 to 31.12.2011
* Savings as on 31.12.2010 : Rs.1500 x 30 (months) = Rs.45,000/-
* DP may be four times of corpus : Rs.45,000 x 4 (times) = Rs.1,80,000/-
11.
i. The CCL has been sanctioned after six months of formation of SHG. However, many banks
sanction CCL even before six months of formation of SHGs, based on satisfactory
experience about functioning of the group.
ii. In the instant case exercise, maximum four times of projected savings of the group has
been considered for sanctioning of CCL and fixation of DP. However, many banks sanction
CCL / DP beyond four times, of the projected corpus based on their experience and
confidence about functioning of the group.
iii. Though DP is fixed for a period of time of one year, it may be enhanced on six monthly
basis depending upon the requirement of SHG and experience of the bank.
Annexure II (Example No. 1) continued..
Copy of Ledger Folio Cash Credit Limit [CCL A/c ]
Name of Bank : xyz RRB CCL limit sanctioned : Amt Rs 2,16,000/-
Name of Branch : ABCpur Period: 01.01.2009 to 31.12.2011
Name of A/c holder : Parvati SHG Drawing Power : Amt.Rs.18,000/-
Account No. : CCL/54321 Period :01.01.2009 to 31.12.2009
Rate of Interest : 10.00% p.a.
SB A/c No. if any : 00000 Operation Mode : Jointly operated by any
two of 3 office bearers or survivors
Amt in Rs
Date Particulars Withd
rawal
Deposit Balance Dr/ Cr No. of
days
Remark
07.01.2009 To cash 5000 -- 5000 Dr 25
31.01.2009 Int.collection 34 -- 5034 Dr 5 Int. for Jan. 2009
collected.
06.02.2009 By cash -- 1500 3534 Dr 17
23.02.2009 To cash 5000 -- 8534 Dr 6
28.02.2009 Int. collection 37 -- 8571 Dr 6 Int. for Feb 2009
07.03.2009 By cash -- 1000 7571 Dr 25
31.03.2009 Int. collection 66 -- 7637 Dr 7 Int. for March
2009
08.04.2009 By cash -- 500 7137 Dr 9
17.04.2009 To cash 5000 -- 12137 Dr 14
30.04.2009 Int. collection 79 -- 12216 Dr 4 Int. for April 2009
05.05.2009 By cash -- 800 11416 Dr 18
23.05.2009 To cash 3000 -- 14416 Dr 9
31.05.2009 Int. collection 105 -- 14521 Dr 6 Int for May 2009
07.06.2009 By cash -- 1200 13321 Dr 24
30.06.2009 Int. collection 111 -- 13432 Dr 6 Int for June 2009
07.07.2009 By cash -- 1000 12432 Dr 10
17.07.2009 To cash 3500 -- 15932 Dr 15
31.07.2009 Int. collection 122 -- 16054 Dr 4 Int. for July 2009
05.08.2009 By cash -- 600 15454 Dr 27
31.08.2009 Int. collection 132 -- 15586 Dr 5 Int for August
2009
06.09.2009 By cash -- 1500 14086 Dr 15
21.09.2009 To cash 3000 -- 17086 Dr 10
Date Particulars Withd
rawal
Deposit Balance Dr/ Cr No. of
days
Remark
30.09.2009 Int. collection 126 -- 17212 Dr 6 Int. for Sept.2009
07.10.2009 By cash -- 2000 15212 Dr 25
31.10.2009 Int. collection 132 -- 15344 Dr 7 Int. for Oct. 2009
08.11.2009 By cash -- 1500 13844 Dr 9
17.11.2009 To cash 3000 -- 16844 Dr 14
30.11.2009 Int. collection 128 -- 16972 Dr 4 Int. for Nov.2009
05.12.2009 By cash -- 500 16472 Dr 27
31.12.2009 Int. collection 140 -- 16612 Dr -- Int. for Dec.2009
NB
i. There were regular transaction in the account during 2009. The operation on limit never
exceeded Drawing Power during the year and monthly interest was serviced in time. As the
cash credit limit was found in order during 2009, it is eligible for renewal for operation for
next year i.e. 2010 with enhancement of Drawing Power based on increased corpus of
savings mobilized by the Group and increase in comfort and confidence of Bank in dealing
with the group.
ii. Though the Drawing Power is fixed for a full year, it may be enhanced on six monthly basis
depending upon the requirement of SHG and experience of the bank.
Annexure II (Example No. 1) continued..
Copy of Ledger Folio Cash Credit Limit [CCL A/c ]
Name of Bank : xyz RRB CCL limit sanctioned : Amt Rs 2,16,000/-
Name of Branch : ABCpur Period: 01.01.2009 to 31.12.2011
Name of A/c holder : Parvati SHG Drawing Power : Amt.Rs.81,000/-
Account No. : CCL/54321 Period :01.01.2010 to 31.12.2010
Rate of Interest : 10.00% p.a.
SB A/c No. if any : 00000 Operation Mode : Jointly operated by any
two of 3 office bearers or survivors
Amt in Rs
Date Particulars Withd
rawal
Deposit Balance Dr/ Cr No. of
days
Remark
01.01.2010 Bal B / F -- -- 16612 Dr 5
06.01.2010 By cash -- 2500 14112 Dr 11 .
17.01.2010 To cash 16000 -- 30112 Dr 15
31.01.2010 Int. collection 189 -- 30301 Dr 4 Int. for Jan. 2010
collected
05.02.2010 By cash -- 4000 26301 Dr 12
17.02.2010 To cash 20000 -- 46301 Dr 12
28.02.2010 Int. collection 272 -- 46573 Dr 6 Int. for Feb 2010
collected
07.03.2010 By cash -- 1500 45073 Dr 8
15.03.2010 To cash 18000 -- 63073 Dr 17
31.03.2010 Int. collection 469 -- 63542 Dr 5 Int. for March
2010 collected
06.04.2010 By cash -- 3000 60542 Dr 25
30.04.2010 Int. collection 502 -- 61044 Dr 6 Int for April 2010
07.05.2010 By cash -- 2000 59044 Dr 11
18.05.2010 To cash 15000 -- 74044 Dr 14
31.05.2010 Int. collection 562 -- 74606 Dr 7 Int for May 2010
collected
08.06.2010 By cash -- 1500 73106 Dr 9
17.06.2010 To cash 3000 -- 76106 Dr 14
30.06.2010 Int. collection 615 -- 76721 Dr 5 Int. for June 2010
collected
06.07.2010 By cash -- 2500 74221 Dr 12
18.07.2010 To cash 4000 -- 78221 Dr 14
Date Particulars Withd
rawal
Deposit Balance Dr/ Cr No. of
days
Remark
31.07.2010 Int. collection 649 -- 78870 Dr 6 Int for July 2010
collected
07.08.2010 By cash -- 1500 77370 Dr 25
31.08.2010 Int. collection 656 -- 78026 Dr 7 Int. for Aug.2010
collected
08.09.2010 By cash -- 2000 76026 Dr 23
30.09.2010 Int. collection 629 -- 76655 Dr 4 Int. for Sept. 2010
collected
05.10.2010 By cash -- 2500 74155 Dr 27
31.10.2010 Int. collection 633 -- 74788 Dr 5 Int. for Oct.2010
collected
06.11.2010 By cash -- 2000 72788 Dr 11
17.11.2010 To cash 6000 -- 78788 Dr 14
30.11.2010 Int. collection 624 -- 79412 Dr 6 Int. for Nov.2010
collected
07.12.2010 By cash -- 9500 69912 Dr 25
31.12.2010 Int. collection 609 -- 70521 Dr -- Int. for Dec. 2010
collected
NB
1. As the CC Limit was found in order during 2009, it was renewed for 2010 with enhancement
of Drawing Power to Rs.81,000/-.
2. There were regular transaction in the account. The operation on limit never exceeded
Drawing Power during the year 2010 and monthly interest was serviced in time. As the cash
credit limit was found in order during 2010, it is eligible for renewal for operation for next
year i.e. 2011 with enhancement of Drawing Power based on increased corpus of savings
mobilized by the Group and increase in comfort and confidence of Bank in dealing with the
group.
3. Though the Drawing Power is fixed for a full year, it may be enhanced on six monthly basis
depending upon the requirement of SHG and experience of the bank.
Annexure II (Example No. 1) continued..
Copy of Ledger Folio Cash Credit Limit [CCL A/c ]
Name of Bank : xyz RRB CCL limit sanctioned : Amt Rs 2,16,000/-
Name of Branch : ABCpur Period: 01.01.2009 to 31.12.2011
Name of A/c holder : Parvati SHG Drawing Power : Amt.Rs.1,80,000/-
Account No. : CCL/54321 Period :01.01.2011 to 31.12.2011
Rate of Interest : 10.00% p.a.
SB A/c No. if any : 00000 Operation Mode : Jointly operated by any
two of 3 office bearers or survivors
Amt in Rs
Date Particulars Withdra
wal
Deposit Balance Dr/
Cr
No. of
days
Remark
01.01.2011 Bal B / F -- -- 70521 Dr 4
05.01.2011 By cash -- 22000 48521 Dr 11 .
16.01.2011 To cash 15000 -- 63521 Dr 16
31.01.2011 Int. collection 502 -- 64023 Dr 6 Int. for Jan. 2011
collected
07.02.2011 By cash -- 18000 46023 Dr 5
22.02.2011 To cash 5000 -- 51023 Dr 7
28.02.2011 Int. collection 392 -- 51415 Dr 5 Int. for Feb 2011
collected
06.03.2011 By cash -- 15000 36415 Dr 14
20.03.2011 To cash 25000 -- 61415 Dr 12
31.03.2011 Int. collection 412 -- 61827 Dr 4 Int. for March
2011 collected
05.04.2011 By cash -- 10000 51827 Dr 13
18.04.2011 To cash 40000 -- 91827 Dr 13
30.04.2011 Int. collection 579 -- 92406 Dr 5 Int for April 2011
collected
06.05.2011 By cash -- 5000 87406 Dr 15
21.05.2011 To cash 20000 -- 107406 Dr 11
31.05.2011 Int. collection 809 -- 108215 Dr 6 Int for May 2011
collected
07.06.2011 By cash -- 7000 101215 Dr 11
18.06.2011 To cash 25000 -- 126215 Dr 13
30.06.2011 Int. collection 932 -- 127147 Dr 7 Int for June 2011
collected
08.07.2011 By cash -- 4000 123147 Dr 11
19.07.2011 To cash 20000 -- 143147 Dr 13
Date Particulars Withdra
wal
Deposit Balance Dr/
Cr
No. of
days
Remark
31.07.2011 Int. collection 1125 -- 144272 Dr 4 Int. for July 2011
collected
05.08.2011 By cash -- 5000 139272 Dr 27
31.08.2011 Int. collection 1188 -- 140460 Dr 5 Int. for August
2011 collected
06.09.2011 By cash -- 6500 133960 Dr 12
18.09.2011 To cash 25000 -- 158960 Dr 13
30.09.2011 Int. collection 1199 -- 160159 Dr 6 Int. for Sept 2011
collected
07.10.2011 By cash -- 15000 145159 Dr 12
19.10.2011 To cash 10000 -- 155159 Dr 13
31.10.2011 Int. collection 1293 -- 156452 Dr 4 Int. for Oct. 2011
collected
05.11.2011 By cash -- 8000 148452 Dr 26
30.11.2011 Int. collection 1229 -- 149681 Dr 5 Int. for Nov.2011
collected
06.12.2011 By cash -- 5000 144681 Dr 11
17.12.2011 To cash 22000 -- 166681 Dr 15
31.12.2011 Int. collection 1326 -- 168007 Dr -- Int. for Dec.2011
collected
NB
a. As the CC Limit was found in order during 2010 it was renewed for 2011 with enhancement
of Drawing Power to Rs.1,80,000/-.
b. There were regular transaction in the account. The operation on limit never exceeded
Drawing Power during the year 2011 and monthly interest was serviced in time. As the cash
credit limit was found in order during 2011, it is eligible for re sanction of the limit.
c. Though the Drawing Power is fixed for a full year, it may be enhanced on six monthly basis
depending upon the requirement of SHG and experience of the bank.
Annexure II (Example No. 1) continued..
Parvati SHG
Month wise Progressive debit and credit in the CCL A/c.
Amt. Rs.
Month Debit Credit Remark
During the Cumulative During the Cumulative
Jan 2009 5034 5034 -- --
Feb 2009 5037 10071 1500 1500
Mar 2009 66 10137 1000 2500
April 2009 5079 15216 500 3000
May 2009 3105 18321 800 3800
June 2009 111 18432 1200 5000
July 2009 3622 22054 1000 6000
Aug. 2009 132 22186 600 6600
Sept.2009 3126 25312 1500 8100
Oct. 2009 132 25444 2000 10100
Nov.2009 3128 28572 1500 11600
Dec.2009 140 28712 500 12100
Jan 2010 16189 44901 2500 14600
Feb 2010 20272 65173 4000 18600
Mar 2010 18469 83642 1500 20100
April 2010 502 84144 3000 23100
May 2010 15562 99706 2000 25100
June 2010 3615 103321 1500 26600
July 2010 4649 107970 2500 29100
Aug. 2010 656 108626 1500 30600
Sept.2010 629 109255 2000 32600
Oct. 2010 633 109888 2500 35100
Nov.2010 6624 116512 2000 37100
Dec.2010 609 117121 9500 46600
Jan 2011 15502 132623 22000 68600
Feb 2011 5392 138015 18000 86600
Mar 2011 25412 163427 15000 101600
April 2011 40579 204006 10000 111600
May 2011 20809 224815 5000 116600
June 2011 25932 250747 7000 123600
July 2011 21125 271872 4000 127600
Aug. 2011 1188 273060 5000 132600
Sept.2011 26199 299259 6500 139100
Oct. 2011 11293 310552 15000 154100
Nov.2011 1229 311781 8000 162100
Dec.2011 23326 335107 5000 167100
Annexure II continued.
Example No. 2
Fixation of Cash Credit Limit [CCL] and Drawing Power [DP] to SHG
1. Name of the SHG : Laxmi Svayam Sahayata Samooh (SHG)
2. No. of SHG members : 14
3. Periodicity of meeting : once in a week
4. Periodicity of meeting and savings : once a month
5. Monthly savings amount of
each SHG member : Rs.100/-
6. Total monthly savings by the group : Rs.100 x 14 = Rs.1400/-
7. Projected savings of the group after
3 yrs : Rs.1400 x 36 (month) = Rs.50,400/-
8. Four times of saving at the end of 3
yrs which can be sanctioned as CCL : Rs.50,400 x 4 (times) = Rs.2,01,600/-
9. Date of formation of SHGs with holding
first meeting and saving of the group : 01.09.2008
10. CCL sanctioned after six months on
01.04.2009 for a period of three years : Rs.2,01,600/-
11. Fixation of Drawing Power [DP] for 1st year from 01.04.2009 to 31.03.2010

* Savings as on 31.03.2009 : Rs.1400 x 6 (month) = Rs,8,400/-

* DP as two times* of the corpus : Rs.8,400/- x 2 (times) = s.16,800/-
* (as this is the first disbursement even though credit limit has been sanctioned with a multiple of 4)
Annexure II (Example No. 2 ) continued
Copy of Ledger Folio Cash Credit Limit [CCL A/c ]
Name of Bank : xyz RRB CCL limit sanctioned : Amt Rs 2,01,600/-
Name of Branch : ABCpur Period:01.04.2009 to 31.03.2012
Name of A/c holder : Laxmi SHG Drawing Power for Ist yr : Amt.Rs. 16,800/-
Account No. : CCL/12345 Period :01.04.2009 to 31.03.2010
Rate of Interest : 10.00% p.a.
SB A/c No. if any : 00000 Operation Mode : Jointly operated by any
two of 3 office bearers or survivors
Amt in Rs
Date Particulars Withd
rawal
Deposit Balance Dr/ Cr No. of
days
Remark
05.04.2009 To cash 800
0
-- 800
0
Dr 12
17.04.2009 To cash 400
0
-- 1200
0
Dr 14
30.04.2009 Int. Collection 72 -- 12072 Dr 6 Int. for April 09
collected
07.05.2009 By cash -- 1400 10672 Dr 11
18.05.2009 To cash 5000 -- 15672 Dr 14
31.05.2009 Int. collection 112 -- 15784 Dr 4 Int. for May 09
collected
05.06.2009 By cash -- 1000 14784 Dr 20
25.06.2009 By cash --- 500 14284 Dr 6
30.06.2009 Int. collection 122 -- 14406 Dr 11 Int. for June 09
collected
12.07.2009 By cash -- 1400 13006 Dr 20
31.07.2009 Int. collection 115 -- 13121 Dr 8 Int. for July 09
collected
09.08.2009 By cash -- 1100 12021 Dr 12
21.08.2009 To cash 4000 -- 16021 Dr 11
31.08.2009 Int. collection 117 -- 16138 Dr 15 Int. for Aug 09
collected
16.09.2009 By cash -- 500 15638 Dr 15
30.09.2009 Int. collection 131 -- 15769 Dr 6 Int. for Sept 09
collected
07.10.2009 By cash -- 1000 14769 Dr 15
22.10.2009 By cash -- 800 13969 Dr 10
31.10.2009 Int. collection 125 -- 14094 Dr 5 Int. for Oct 09
Date Particulars Withd
rawal
Deposit Balance Dr/ Cr No. of
days
Remark
collected
06.11.2009 By cash -- 1000 13094 Dr 7
13.11.2009 By cash -- 1600 11494 Dr 18
30.11.2009 Int. collection 101 -- 11595 Dr 7 Int. for Nov 09
collected
08.12.2009 By cash -- 1200 10395 Dr 8
16.12.2009 To cash 5500 -- 15895 Dr 16
31.12.2009 Int. collection 115 -- 16010 Dr 4 Int. for Dec 09
collected
05.01.2010 By cash -- 1250 14760 Dr 13
18.01.2010 By cash -- 800 13960 Dr 14
31.01.2010 Int. collection 124 14084 Dr 7 Int. for Jan 2010
collected
08.02.2010 By cash -- 1400 12684 Dr 7
15.02.2010 To cash 3000 -- 15684 Dr 14
28.02.2010 Int. Collection 112 15796 Dr 4 Int. for Feb 2010
collected
05.03.2010 By cash -- 1100 14696 Dr 14
19.03.2010 To cash 900 -- 15596 Dr 13
31.03.2010 Int. collection 129 -- 15725 Dr -- Int for March
2010 collected
Review of operation on the Limit during the year (01 April 2009 to 31 March 2010)
1) There were regular transactions in the account.
2) The operation on limit never exceeded Drawing Power during the year
3) Monthly interest was serviced in time.
As the cash credit limit was found in order during 2009-10, it is eligible for renewal for
operation for next year i.e. 2010-11 with enhancement of Drawing Power based on increased
corpus of savings mobilized by the Group and increase in comfort and confidence of the Bank
in dealing with the group.
Fixation of Drawing Power [DP] for 2nd year from 01.04.2010 to 31.03.2011
* Savings as on 31.03.2010 : Rs.1400 x 18 (month) = Rs 25,200/-
* DP as three
#
times of the corpus : Rs.25,200/- x 3 (times) = Rs. 75,600/-
# (increased to 3 times as operation of the SHG were found to be satisfactory)
Annexure II (Example No. 2 ) continued.
Copy of Ledger Folio Cash Credit Limit [CCL A/c ]
Name of Bank : xyz RRB CCL limit sanctioned : Amt Rs 2,01,600/-
Name of Branch : ABCpur Period:01.04.2009 to 31.03.2012
Name of A/c holder : Laxmi SHG Drawing Power for IInd yr : Amt.Rs. 75,600/-
Account No. : CCL/12345 Period :01.04.2010 to 31.03.2011
Rate of Interest : 10.00% p.a.
SB A/c No. if any : 00000 Operation Mode : Jointly operated by any
two of 3 office bearers or survivors
Amt in Rs
Date Particulars Withd
rawal
Deposit Balance Dr/ Cr No. of
days
Remark
01.04.2010 Balance B/F -- -- 15725 Dr 4
05.04.2010 By cash -- 2000 13725 Dr 26
30.04.2010 Int. Collection 115 -- 13840 Dr 6 Int. for April 2010
collected
07.05.2010 By cash -- 1200 12640 Dr 15
22.05.2010 To cash 25000 -- 37640 Dr 10
31.05.2010 Int. collection 178 -- 37818 Dr 5 Int. for May 2010
collected
06.06.2010 By cash -- 2000 35818 Dr 11
17.06.2010 To cash 10000 -- 45818 Dr 6
23.06.2010 To cash 5000 -- 50818 Dr 8
30.06.2010 Int. collection 346 -- 51164 Dr 7 Int. for June 2010
collected
08.07.2010 By cash -- 3600 47564 Dr 11
19.07.2010 To cash 12000 -- 59564 Dr 13
31.07.2010 Int. collection 454 -- 60018 Dr 9 Int. for July 2010
collected
10.08.2010 By cash -- 4100 55918 Dr 7
17.08.2010 To cash 9000 -- 64918 Dr 15
31.08.2010 Int. collection 522 -- 65440 Dr 4 Int. for Aug 2010
collected
Date Particulars Withd
rawal
Deposit Balance Dr/ Cr No. of
days
Remark
05.09.2010 By cash -- 3700 61740 Dr 9
14.09.2010 To cash 10000 -- 71740 Dr 17
30.09.2010 Int. collection 558 -- 72298 Dr 7 Int. for Sept 2010
collected
08.10.2010 By cash -- 4000 68298 Dr 13
21.10.2010 To cash 5000 -- 73298 Dr 11
31.10.2010 Int. collection 603 -- 73901 Dr 6 Int. for Oct 2010
collected
07.11.2010 By cash -- 8500 65401 Dr 12
19.11.2010 To cash 6000 -- 71401 Dr 12
30.11.2010 Int. collection 571 -- 71972 Dr 6 Int. for Nov 2010
collected
07.12.2010 By cash -- 7000 64972 Dr 14
21.12.2010 To cash 5000 -- 69972 Dr 11
31.12.2010 Int. collection 578 -- 70550 Dr 4 Int. for Dec 2010
collected
05.01.2011 By cash -- 4000 66550 Dr 12
17.01.2011 To cash 7000 -- 73550 Dr 15
31.01.2011 Int. collection 598 -- 74148 Dr 5 Int. for Jan 2011
collected
06.02.2011 By cash -- 6500 67648 Dr 16
22.02.2011 To cash 4000 -- 71648 Dr 7
28.02.2011 Int. Collection 535 -- 72183 Dr 7 Int. for Feb 2011
collected
08.03.2011 By cash -- 8400 63783 Dr 8
16.03.2011 To cash 7500 -- 71283 Dr 16
31.03.2011 Int. collection 591 -- 71874 Dr -- Int for March
2011 collected
Review of operation on the Limit during the year (01 April 2010 to 31 March 2011)
An established Sound Credit History was found with
1) Large Turn-over
2) Regular servicing of interest
3) Increased savings and corpus by SHG members. Members had increased per month saving
from Rs 100/- to Rs 150/- from 01 Octiober, 2010.
4) Five out of fourteen members in the group had opened individual accounts with bank
branch and maintaining them properly.
The cash credit limit was found in order during 20010-11, and was eligible for renewal for
operation for next year i.e. 2011-12 with enhancement of Drawing Power with in sanctioned
limit.
However, the Bank, in view of established sound credit history and increased credit requirement
of the SHG, agreed to re-sanction higher Credit Limit and Drawing Power for the SHG
Fixation of Credit Limit for three years ( 01 April, 2011 to 31 March, 2014 )

a) Savings as on 31.03.2011 : Rs.46,200/-
b) Projected savings of the group after
2 yrs ( Rs.46,200 + Rs.2,100 * 24 months) : Rs.96,600/-
c) CCL sanctioned as ten times of
projected saving : Rs.9,66,000/-
Fixation of Drawing Power (DP) for the year from 01.04.2011 to 31.03.2012

* Savings as on 31.03.2011 : Rs.46,200/-

* DP as six times of the corpus : Rs.2,77,200/-
Annexure II (Example No. 2 ) continued.
Laxmi SHG
Month wise Progressive debit and credit in the CCL A/c.
Amt. Rs.
Month Debit Credit Remark
During the
month
Cumulative During the
month
Cumulative
2009-10
April 2009 12072 12072 -- --
May 2009 5112 17184 1400 1400
June 2009 122 17306 1500 2900
July 2009 115 17421 1400 4300
Aug. 2009 4117 21538 1100 5400
Sept.2009 131 21669 500 5900
Oct. 2009 125 21794 1800 7700
Nov.2009 101 21895 2600 10300
Dec.2009 5615 27510 1200 11500
Jan 2010 124 27634 2050 13550
Feb 2010 3112 30746 1400 14950
Mar 2010 1029 31775 1100 16050
2010-11
April 2010 115 31890 2000 18050
May 2010 25178 57068 1200 19250
June 2010 15346 72414 2000 21250
July 2010 12454 84868 3600 24850
Aug. 2010 9522 94390 4100 28950
Sept.2010 10558 104948 3700 32650
Oct. 2010 5603 110551 4000 36650
Nov.2010 6571 117122 8500 45150
Dec.2010 5578 122700 7000 52150
Jan 2011 7598 130298 4000 56150
Feb 2011 4535 134833 6500 62650
March 2011 8091 142924 8400 71050