5. Self Help Group

A Self Help Group (SHG) is a small, economically homogenous and affinity group of rural poors having a common perception of need and impulse towards collective action, voluntarily formed to save and mutually agreed to contribute to a common fund to be lent to its members as per group decision for meeting the emergent needs of the members, both for productive and consumptions purposes to raise their income and improve their living standards.

Objective:       

i.     To evolve supplementary credit strategies for meeting the credit need of the rural poor.
ii.    To encourage banking activities – both on thrift as well as an credit portfolio.
iii.   To build mutual trust and confidence amongst the group members as also between the bankers and rural poors / groups.

Membership:

The membership of the group should be restricted between 10 to 20. Only one person of a family either male or female can be the member of an SHG. The Group should preferably be economically and socially homogeneous, covering people below poverty line, above poverty line or even a mixture of the two. 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 financing SHGs by Bank provided the SHG is not in default to it. However, the bank loan was not be utilized by the SHGs for financing a defaulter member to the Bank.

Opening of S.B. Account:

S.B. account of the registered or unregistered SHGs are to be opened. For this purpose a duly filled in application form should be obtained along with

i.       A copy of the resolution passed in the meeting of the SHG signed by all members containing the decision to open the bank account with authorization of 3 members for joint operation of the account
ii.      Bye law if any, initial cash deposit of Rs.50/- may be accepted for opening of S.B. account. The A/c. and Pass Book should be in the name of SHG.

Internal lending by SHG:

The deposit held in SB Account over the minimum balance of Rs.50/- shall be utilized for internal lending among the members. The repayment including principal and interest shall be deposited in the SB account and further lending be carried on to maintain the cycle.

Assessment of SHG:

The SHG is required to be assessed by the branch according to prescribed check list before extending credit.

Source: http://www.unitedbankofindia.com