NABARD's Development Policy Department defines Self Help Group as—“Voluntary organization of people operating within a frame work of rules and regulations for common economic and social objectives with an approach of participatory decision-making and sharing of benefits in an equitable manner”. (Vide Circular No.NB.DPD.SHG/3755/92-APACS/93-04 dated 02/03/1994).
A Self-Help Group, with unbroken record of having deposited their periodical savings for at least the last six months at weekly/ fortnightly / monthly intervals on behalf of each of its members at the pre-determined rate and periodicity (both decided by the Group through unanimous decision adopted in its meeting, duly recorded), may be financed either through the member Primary Co-operative Agricultural Credit Societies (PACS) or direct by the Branches of the Bank in semi-urban, urban or metropolitan areas where there is no member PACS, provided that in the latter case the SHG shall become a nominal member of the Bank. Loan will be available for any productive (agriculture, industry, service, trade etc.) or consumptive purpose, but the total amount of loan to the SHG (for any one or more members) will not exceed six times of the total cumulative savings of the SHG as a whole (i.e., the total deposit mobilized by all the SHG members).
The 'Bank' can finance JLG by adopting any of the two models.Model A - Financing Individuals in the Group: Model B - Financing the Group:
Repayment period will generally be 12 to 60 months, depending on the activities to be undertaken by the SHG members and the periodicity of repayment will be monthly (equal monthly installments).
As may be decided by the Bank from time to time.Security to be held: The borrowing SHG/ PACS shall deposit the savings of the SHG members with the Bank and since based on the quantum of deposit so mobilized, loan up to 6 times will be provided, this amount (along with further amounts to be deposited by the SHG/ PACS at pre-determined rate at periodical intervals) shall be treated as Security for the loan.
List of the documents to be submitted