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5. Micro Credit - SHGs
Micro Credit involves the provision of thrift, credit and other financial services and products of lower value to the poor in rural, semi urban and urban areas for enabling them to raise their income levels and improve their living standards. It has become a successful instrument for economic empowerment of the underprivileged sections of the society by improving their access to formal credit system through Self Help Groups (SHG). Loans provided through Micro Credit can be used for consumption or production. After a period of time, groups may be encouraged to undertake income-generating activities.
Models of credit linkage of Self Help Groups (SHG):
- Dhanlaxmi Bank takes up the task of organizing SHGs and financing them
- Financing SHGs, which are organized by NGOs etc. directly (Direct Linkage)
- Financing NGOs / MFIs for on lending to SHGs organized by them ( Indirect Linkage)
Micro finance loans are to be repaid after a mutually agreeable term as defined by the bank and SHG. This will depend on income to a maximum period of five years. In case of projects, the maximum period will depend on the income generated from project.
Eligibility
- The eligible loan amount to SHGs is computed as a multiple of savings mobilized by them (usually two to four times)
- Selection of the SHGs is based on the rating model developed by NABARD.
- Minimum score required for selection of SHG for linkage/lending is 80%
- Financial viability, technical feasibility and bankability of the project would need to be looked into in respect of Project finance under direct linkage
- The leadership of the group and facilitator support also examined
6. Kissan Card
The Dhanam Kissan Card directly addresses a farmer’s short-term and contingent credit needs. It facilitates adequate and timely credit for a farmer’s comprehensive credit requirements under a single window adopting a whole farm approach.
Features
- For crop loans with validity period of 3 years, subject to annual review. When term loan facilities are sanctioned, the validity of the card may be extended from 3 to 5 years.
- Short term/crop loans and working capital for agriculture and similar loans will be provided as revolving cash credit limit, repayable in 12 months.
- Term loans repayable within a maximum period of 5 years, depending on the type of activity/investment.
- No withdrawal in the account should remain outstanding for more than 12 months for crop loans, except in cases where loans are given for sugarcane, banana and other annual yielding crops. In such cases, debits to be wiped out at the time of marketing of produce or within 18 months, whichever is earlier. As far as possible, borrowers are advised to remit the amount whenever there are surpluses & keep the account operative. It is advisable to remit the sale proceeds of the crops directly to the Card Account
Eligibility:
The credit facility extended under the scheme will be in the nature of a term loan and revolving cash credit for agriculture and allied activities. The criteria for selecting persons for issuing a Dhanam Kissan Cards are as follows:
- Loan for any activity coming under purview of production credit of agriculture, working capital requirements of allied activities may be considered under the scheme ensuring repayment capacity of farmers
- Dhanam Kissan Card is not issued to parties dealing in Selective Credit Control commodities, minors, and POA holders
- The applicant should not be a defaulter with any financial institution, and should come within the Service Area Norms, subject to relaxations therein
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