The Government of Tamil Nadu through the Tamil Nadu Corporation for Development of Women Ltd has implemented a scheme, called “Mahalir Thittam”. Under the SHG-Bank Linkage Programme introduced by the NABARD, the Cooperative Banks provide financial assistance to the Self Help Groups fulfilling the following the following criteria.

Eligibility Criteria (Stage I)

1.Group in active existence for over six months.
2.Group size in the range of 12 to 20 members.
3.Minimum of two meetings per month.
4.Group (not individual members) not a defaulter of Bank loans.
5.Recovery of both internal and external loans not less than 85%.
6.Availing of internal loans by not less than 50% members.
7.Regular savings by all members.
8.Proper maintenance of books of Accounts.

The groups which passed through the above screening process,by complying with all these eight essantial parameters should alone be taken up for credit rating.Groups which cannot fulfill all the eight parameters should be rejected in the first phase itself and should not be taken up for rating of Groups.Such groups are always free to reapply when they fulfill the minimum criteria.

Credit Limits

Based on the rating of groups done by the joint Appraisal Committee,the following credit limits will be sanctioned by the Bank to the SHGs.

1.The SHG will be sanctioned a term loan or revolving credit to the tune of not less than 1:4-Savings:Credit Limit Ratio. 
2.To start with the first loan may be given to an extent of 4 times of savings. After evaluating performance of group in the long run,subsequent credit limits may be fixed at more than 1:4 ratio also. It may be scaled upto 1:15 or even more in stages. 
3.The discretion of fixing the higher limits exceeding 4 times of savings to a group will be given to the Joint Appraisal Committee represented by Bank,NGO and PIU.

Purpose of the Loan

The loan may be utilized for productive purposes or consumption purposes or both. However, groups must be motivated to use credit to use credit mainly for productive purpose, as consumption loans do not generate any income to repay the loan dues.

Type of Loan

The guidelines for selection of 6 months-2 years old SHG for Bank Loan are as under.

Term Loan

Since most members will utilize the SHG loan for rural farm and non-farm activities, which generate income at regular intervals,loans for Mahalir Thittam groups can be sanctioned as term loans.Bank may consider,on merit,sanction of a second or subsequent loan to Self Help Groups,in consultation with the NGO and PIU.