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Income Generating Activities

The following schemes are intended to help the members of the poor families to set up income
generating activities based on their own skills and local resources. !n case of lack of skills, and
availability of infrastructure facilities locally, the schemes and programmes also help the individuals to
get trained in the required skills and develop the required infrastructure so that the poor families can
create their own livelihood opportunities and generate income on a sustainable basis.

3.1 Swarnajayanthi Gram Swarozgar Yojana {SGSY)

What is the scheme?

Bank credit and government subsidy is provided to those members of the poor families below poverty
line, who are willing to take up sustainable income generating activities. The banks fund those
economic activities, which have a potential market. These activities are taken up based on available
local resources and an individual's entrepreneurial skills. The individuals opting for this benefit should
be willing to invest in 10-15 of the total cost of the activity as their own contribution. (Bank loan+
Govt. Subsidy+ individualfgroup contribution)

The income generating activities can be in any form like petty business like grocery, vegetable
selling, dairy, agriculture, small industries like coir production, garment manufacturing and other
allied activities. Over a period of time these economic activities should lead to building assets to help
the families live on a sustainable basis.

The persons opting to avail this benefit will be known as 'Swarozgaris' meaning self-employed. The
scheme under which the credit facilities are given is known as SWARNAJAYANTI GRAM

The key elements in this programme are:

1. The beneficiaries can choose the activity based on the availability of the local resources
2. The Swarozgaris should have the right aptitude as well as the skills for carrying out
sustainable income generation activities.
3. The products f services offered should have marketable value

Who is eligible for the Scheme?

1. The Swarozgaris should be individuals below poverty line
2. The Swarozgari can be an individual (He should be the spouse of the woman member of the
SHG group)
The Swarozgari can be a group of individuals (Women SHG)
3. As a group, the members should take up single activity. !n case of necessities, the group can
also take up multiple activities and avail group loans. !n either case, loan will be sanctioned
in the name of the group and the group stands as a guarantee to the Bank for repayment of
+. Any individual f group member can avail the SGSY fund only once


Depending on the project cost, an individual Swarozgari can take the loan in lump sum or in
installments. The credit and the loan repayment is decided by the Bank

Flow chart {1) Assistance to Individual Swarozgari
2. The Swarozgari attends the Joint
identification camps conducted by DRDA,
NPDO, Nandal level Officer 8 Bankers
3. !dentified Swarozgaris apply for the
SGSY funds. Applications available at
+. Applications are processed by NPDO
by preparing the project report in close
association and with the a consent from
the Bank

5. Project proposals are submitted to
DRDA for Sanction
6. After careful scrutiny, the Sanctions
are accorded by DRDA and directly
communicated to the !ndividual
These subsidies and credit components
are as given below:
a. Subsidy will be uniform of Rs.7,500f-
(Rs.10,000 in case of SCfSTfPHf)as
a maximum subsidy ceiling
b. +0-50 is given as a bank loan
c. The rest of the project cost is
incurred by the individual's

1. The Swarozgari identifies key activities
in which they require the finance
7. The loan formalities are completed in
the bank and the individual will be given
the following information

Credit amount
Repayment period and installment

1. Swarozgari, as a Self Help Group
can apply for the loan

Flow chart {2) Assistance to Group Swarozgari
10. The Bank sanctions the loan with a
funding component in the form of a
Govt. subsidy to the NS within 15-30
days of approval from DRDA
3. Application to be duly filled in by the
5. vO approaches the Service Area Bank
for obtaining the consent for Bank loan
7. Bank after careful auditing approves
the proposal for giving the loan
8. Proposals submitted to Nandal
Samakhyas through vO is forwarded to
9.Sanction accorded by DRDA to Nandal
Samakhyas (NS)
2. Obtain the application at DRDAfvO
6. The Bank and DRDA form a Social
Audit Committee to audit the application
i.e.., !ncome Generation Activity project
+. Application to be forwarded to the vO
for approval
The loan given to the NS or vO is again
given as loan to the SHG

11. The loan formalities are completed in
the bank and the individual will be given
the following information

Credit amount
Repayment period and installment


SGSY Special Projects

3.2 SGSY scheme for Special Projects

The Special projects are demand driven projects undertaken to encourage the Swarozgaris fSHGsf
fcommunity as a whole to take up economic activities based on the local skills, crafts, and resources
like Kalamkari Paintings, Fashion Designing, Garments manufacturing, Coir Production, Fisheries,
Tribal jewelry handicrafts, Dairy Development etc. These projects are specially designed by the
DRDAs on the demand of the local Swarozgari to give fillip to the old and dying crafts, which have
market potential as well as capacity to provide employment to a large number of people.

The objective of special projects is to ensure a time bound programme for bringing a specific number
of families above poverty line through self-employment programmes. This involves different
strategies requiring provision of infrastructure, training, technology, and marketing.

Since 1999, as many as 18 projects are implemented f under implementation in Andhra Pradesh in
the areas of coir manufacturing, fashion technology and designing, improved agricultural technology,
new designs for Kalamkari painting, fishery, improved dairy practices, innovations in tribal jewellery,
new designs in silver filigree, readymade garments with hand woven material and the like.

Who are Eligible for the Scheme?

1. The beneficiaries should be under Below poverty line
2. The members of SHG
3. Group of beneficiaries who are skilled artisans f specialized community, working for a common

Prerequisites for availing the scheme:

1. The project should be taken up at the district level
2. Availability of Local Resources
3. Provision of proper !nfrastructure
+. !mparting of Training for the individuals
5. Product Narketing opportunities
6. The village communities, that possess special skills and have marketable crafts, trade items,
handicrafts etc. can approach the PD DRDA of the district to avail the scheme.

Benefits of the scheme

1. The scheme provides the groupfindividuals to take up income generation activities
2. The groupfindividuals build !ncome generation assets
3. The groupf individual gets profits by marketing their products

The following methodology is adopted for processing the project proposals:

1. Demand driven project proposals are made by the DRDA
2. The project proposal is prepared with all the detailed information pertaining to
a. Number of beneficiaries who can be benefited through this projectf sub project
b. Availability of local resources
c. Required training component and infrastructure in consultation with technical consultants
d. Planning on marketing the products and
e. Budget details clearly mentioned.
3. The project cost should not exceed 15 Crores and should not be below 1 Crores
+. The proposals are sent to the Govt. of !ndia after careful scrutiny by the State Govt
5. Once the Govt approves the proposals, a district coordination committee is set up.
6. The district coordination committee consisting of the District Collector, Bankers, PD, DRDA etc.
convenes in which the Lead District Nanager of the bank issues the certificate of willingness
for the loan to the group after thoroughly auditing the project

SGSY Special Projects

7. The financial assistance is in the form of Govt subsidy (75 Centre share+25 State share) and
the credit component.
a. Subsidy=Naximum of Rs.10, 000f- per individual
Subsidy = Naximum of 1.25 Lakhs per group
b. The rest is to be taken as a loan from the bank
S. The subsidy varies from project to project. For e.g., in the project on fashion designing, the
subsidy component per individual was Rs.7, 500 and the rest was credit from the bank.
Whereas for the coir project, the subsidy component was 50 and the credit component was

The following is the approach to avail the benefits from the SGSY district special project (The DRDA
facilitates the whole project implementation)

1. The beneficiaries are mobilized to organize themselves into Groups and adequate awareness is
given to them by the DRDA about the purpose of project.
2. The training for the SHGs is carried out for the related projects
3. After the completion of training, the beneficiaries are linked to the bank to avail the credit and
start developing the activity
+. The Group should identify a common place to producef manufacture their products.
5. Procurement centers are established for collective marketing
6. The DRDA facilitates to market the products directly to the whole sellersf traders without any
intervention of middle men
7. Nonitoring and evaluation will be carried by the DRDA 8 third party independent agencies in
coordination with the line departments.

Community Investment Fund

3.3 Community Investment Fund

!n order to help the rural communities meet their investment requirements of income generation and
livelihood creation activities, the !ndira Kranthi Patham provides Community !nvestment Funds (C!F)
to SHGs, vOs and Nandal Samakhyas. The C!F is utilized by the communities for income Generation
activities like dairy, Livestock, Productive Physical infrastructure like drying platforms for commodities
and social development. !t supports the communities in prioritizing their livelihood needs through
investments in sub-projects proposed and implemented by the community and its members.
C!F (Community !nvestment Fund) is the fund at vOfNS level for providing loans and mobilizing bank
credit to the members for,
!ncome -Generation activities
Providing working capital for procurement 8 Narketing by vOs and NS
For creating productive infrastructure and its Nanagement

CIF fund is given to the following Sub-Projects

1. Recoverable Fund {in the form of loans):

Income Generation and livelihood improvement
Nicro plans by SHGs to take up various activities under agriculture, animal husbandry and non-farm
(production, service and business), Commodity Narketing and Food security.

Land purchase and development

2. Non-Recoverable Fund {also known as Social CIF):

Social Development
Some of the activities under this are Health and Nutrition, Education, Gender, Disability, Youth and
Skill developmentfjobs through Social C!F, which is to be mentioned in the Nicro-Credit Plan

Procurement Centers, drying platforms, weighing scales required for marketing the Agri-products of
the villages

Procedure followed for availing the loan by the SHGs

Step 1: Prioritizing the members in the SHGs

Priority is given to the poorest of the poor who do not have food security
Groups which are + to 6 months old
A village organization ensures that C!F should be given to the marginalized sections of the society
comprising at least 50 SC community and 10 ST community.
SHGs generally discourage concurrent loans to their members unless all members have had
access to loans at least once
No individual should be allowed to take a loan of more than 25 of the funds available for
lending including corpus (Revolving fund) and C!F.

Step 2: Preparation of the Micro - Credit Plan by the SHGs

Micro - credit plan is an investment plan, made by the group members based on their existing
skills (professional 8 technical) and available resources. !t is a participative effort by the group
towards fulfilling food security needs and reduce the dependency on money lender f trader and
taking up an enterprise of their own choice to enhance living conditions, increase income levels and
strengthen their institutions in a sustainable way

Community Investment Fund

For the preparation of the Micro - Credit plan, {Annexure - 1)

The Self Help Groups are facilitated by the vO to prepare a list of all members along with their
loan requests indicating both activityfpurpose and loan amount.
SHGs are sensitized to give preference to PoPfBPL, particularly SC and ST communities, over
other members.
The members who have earlier availed loans and have yet repaid in full would be given less
The members are facilitated to prepare the list of activities to be undertaken and compute the
cost of implementation these activities
Finally the group would appraise each loan request and determine the loan terms such as
amount of loan, installment amount, and repayment period, etc.

Steps followed after the preparation of the Micro - Credit Plan by the SHGs
Step 1: Once the SHG - Nicro credit Plan is prepared, it is sent to the vO for the appraisal of the
Plan based on the regularity of savings and internal lending of funds, bookkeeping, regular meetings
etc. {Annexure -3)
Step 2: village Organization (vO) also prepares the list of activities that are beneficial to all the poor
in the village, which along with micro plans of SHGs become a vNP (village Nicro Plan). {Annexure
Step 3: vO separately plans for food security interventions and the funds required. Social
Development and Productive !nfrastructure needs of the vO are also included in the vNP.
Step 4: Later the village Nicro Plan (vNP), which is prepared at the village Level, is sent to the
Nandal Level for appraisal by the Nandal Samakhyas. Annexure 4
Step 5: Finally the appraisal is sent to DPNU for the release of C!F.
Fund Patterns
As per the size of the districts, in RPRP districts each Nandal is eligible for Rs. 76.7 Lakhs of C!F
(for !G- !ncome generation, SD- Social Development, PP!- Productive Physical !nfrastructure)
TPNU Nandals are eligible for Rs. 115 Lakhs
!ndicated ratios: !G component - 75 of total C!F, SD component - 12.5 of total C!F and PP!
component - 12.5 of total C!F

Allocation and Repayment of funds
Once the village Nicro Plan (vNP) is submitted and is approved by the NS, the vNP is sent to District
project management unit (DPNU) for C!F allocation. The fund amount is given as a grant to the NS
which is allocated as a loan to the vOs by the Nandal Samakhyas with an interest rate of 2-6 and
to the SHGs from the vOs with an interest rate of 3-9.

Community Investment Fund

Terms and Conditions,
No individual should be allowed to take a loan of more than 25 of the funds available for
lending including corpus and C!F.
Repayment Period of each loan is discussed f negotiated by the group.
Principal installments are usually fixed at monthly rates and are determined based on the
Savings capacity
Cash flow from activity and Seasonality
However, the tenure of the loan never exceeds the life of assets being funded or time period
for which the borrower possesses them.

Repayment of the Loan by the SHGs to VO, by the VO to the MS.
Nembers in the SHGs who have taken the loan should repay the amount between 12 to 2+
months to the SHG
The SHG should pay the loan within 50 months to the vO.
The vO should pay the loan to the NS within 100 months

Utilization Certificates (UCs) is to be prepared by SHGs, vOs and the NSs to apply for the funds in
future. {Annexure 5)

Community Investment Fund

Annexure - 1

For vO Office use only:


v!LLAGE: __________________________

Dear Nadam,

We ______________ (name of SHG) would like to avail Community !nvestment Fund (C!F) as loan
for !ncome Generation for extending credit facilities to our members. Please find below the details of
our SHG.

1. Name of our SHG_______________________________

2. Date of !nitiation ______________________________________________

3. SHG Leader(s) Smt. ______________________________________________________ and

+.Our Bank Account No. _________________________with ___________________Bank

5. Lending History of our SHG:

Sl. No
Amount in Rs
1 Cumulative Loan Disbursed


Cum. Principal Recovered
3 Balance Principal OfS

+ Over due Amount

Application No:
Date of Receipt by vO:

Community Investment Fund

6. Nicro Credit Plan of our SHG

Name of
of the
in Rs


Sources of Fund for Executing Nicro Credit Plan of SHG:

Total Loan Requirement for
income Generation Activities in Rs
Own Savings in
Bank Linkages
in Rs
CIF Loan in Rs

Kindly sanction us a C!F loan of Rs_______________as per the details mentioned in Para 7 above.

Signature of the President Signature of the Treasurer

Community Investment Fund

Annexure -2

For NS Office use only:


NANDAL: __________________________ D!STR!CT:

Dear Nadam,

We ______________ (name of vO) would like to avail Community !nvestment Fund (C!F) as loan for
!ncome Generation activities including the Nicro credit plans prepared by our member SHGs and
working capital requirement for our food security and marketing initiatives and as a grant for
executing Social Development and Physical Productive !nfrastructure subprojects. Please find below
the details of our vO and member SHGs.

1. Name of our village Organisation

2. Full Address:
Village: __________________Post Office: _____________________________

District: _________ Pin code: _________ Telephone: ________________

3. Date of !nitiation ______________________________________________

+. Registered (registration No: ___________Not Registered
5. Associated with NGOf Co-operativesf Other Development Organisation: ____________________
6. vO Leader(s) ________________________________



7. Our Bank Account No. _________________________with ________________________Bank
_______________ Branch

Application No:
Date of Appraisal by NNS:

Community Investment Fund

8. SHG Wise C!F Loan Requirement for Executing Nicro Credit Plan of SHGs (in Rs).

Name of SHG Number of
Total cost of
Generation Sub
Loan form
C!F Loan

9. Component Wise C!F Requirement for Executing village Nicro Plan (in Rs.)

Sl. No Particulars* Amount
!G activities
1 NCPs of SHGs
2 Working Capital for Food Security !ntervention
3 Working Capital for marketing Activities
Total !G C!F:
Social Development subprojects
Total SD C!F
Productive Physical !nfrastructures

Community Investment Fund

Note: Other than micro plans of SHGs, for all categories a detailed description and assessment
report is to be attached. !n case of SHG micro plans micro plans of individual SHGs are to be

10. Sources of Fund for Executing village Nicro Plan:

Total Loan Requirement Own Savings in Rs Bank Linkages in Rs C!F in Rs

11. We have taken up some of the following activities in addition to our Savings & Credit


12. Sources and Uses of Funds of vO:

Sources Amount in Rs Uses Amount in
Savingsf Deposits from Nember


Bank Balance


Cash Balance

!nterest on Loans

Commission Fees on Loans to
Nember SHGs

Nembership Fees 8 Admission
Fees from Nember SHGs



13. Lending History of vO:

(in Rs)
Sl. No Cumulative Loan
Disbursed in Rs
Cum. Principal
Recovered in Rs
Balance Principal
OJS in Rs
Amount in Rs

Kindly sanction us a C!F (as loan of Rs_______________ and as grant of Rs ) as per the
details mentioned in Para 9. NCPs of SHGs, the proposals for food security, marketing intervention,
social development subprojects and Productive Physical !nfrastructure subprojects are enclosed.

Signature of the President Signature of the Treasurer

Community Investment Fund

Annexure - 03
vOs appraisal of SHGs and their members' activities consists of the following:
Status of SHG:
Assessment of SHG is based on regularity of savings and internal lending of funds, bookkeeping,
regular meetings etc.
Financial Viability:
Financial viability talks about the returns to the immediate beneficiaries from the !ncome Generation
Activities. The objective of appraisal of this aspect is to assess whether a proposal for investment is
financially viable or not.
Commercial Aspects:
The commercial aspects of a micro plan look into the mechanism for forward 8 backward linkages. !t
examines the arrangement for procurement of various inputs and services besides the arrangement
for marketing of outputs produced by the beneficiaries.
Annexure -04
Appraisal of the VO by MS
NSs appraisal of the vO consists of the following:
1. Institutional appraisal:
NS examines the institutional strength of the vO in terms of regularity in conducting meetings,
proper maintenance of records, leadership quality, repayment history etc. NS may examine the
ratings of vO, if available.
2. Assessment of VO entitlement for CIF loan:
NS may use the following formula for arriving at the vO's eligible limit for C!F loan:
(NS entitlement of C!FfTotal no. of BPL families in the Nandal)*No. Of BPL families in the village
3. Economic Viability {in case of social development and Productive Infrastructure
The economic appraisal is directed towards determining whether these activities are likely to
contribute significantly to the development of the village economy as a whole. !n other words, it is
the comparison of quantifiable costs and benefits accruing to the community as a whole and not to
the immediate beneficiaries.
!n addition to the above parameters, social, gender and environmental criteria must be met before
the NS sanctions the vNP.
The appraisal NS takes into account the environmental concerns and negative list items while
sanctioning the C!F.

Annexure - 05
Utilization Certificates {UCs)

In addition to the submission of UC, the SPIA will ensure the following process, which
will suffice in fulfilling the fiduciary requirements in respect of the end use of funds:

NS is required to get their accounts audited by the Chartered Accountant as per the common chart of
accounts circulated by the SPNU, which clearly indicates the break up of C!F received and utilized.
However, NS should also keep the records of Social audit done by the vO and the comments of NS
on the C!F process followed for verification.

(Social Audit: A team consisting of both vO 8 the Gram Panchayat Nembers must undertake social
audit of all the sub projects after completion. The audit must be done to assess whether the money
has been spent as planned or not, whether there was transparency in financial transactions and
whether the target beneficiary (POP 8 poor) is covered or not. The Gram Panchayat must endorse
the audit report. This should be verified on a sample basis by the internal audit wing)

Community Investment Fund

Certificate from SHG

Details of loan activities of the SHG for the quarter !f !!f !!!f !v of the FY _________
Name of the SHG:
Status of the SHG: PoPfBPLfOthers


Signatures of the President, Secretary and Treasurer:

Source of funds Sl.
Name of
Name of
Bank C!F Recycl


Community Investment Fund

Certificate from vO
Details of the SHG micro plans consolidated and other vO activities for the quarter !f !!f !!!f !v of the
FY __________
Name of the vO:
a. Classification of SHGs and source of funds

Type of SHG No. Own
CIF Bank
Other sources
Disabled persons

b. Activity wise utilization of funds
Source of funds Sl.No Name of the
No. Of
CIF Bank Recyc
SHG Micro plans
! Agriculture
!.1 Crop cultivation
1.2 Bore-well
1.3 Pump-set
1.+ Bullock and cart
1.+ Others
Sub Total
!! Animal Husbandry
!!.1 Nilch animals
!!.2 Sheep and goats
!!.3 Others
Sub Total
!!! Non-farm
!!!.1 Production

!!!.2 Service

11!.3 Business

Sub Total
VO plans
!v Food security
v Narketing
v! Social Development

v!! Productive Physical

Grand Total

Community Investment Fund

c. Category wise utilization of funds:

Source of funds
funds of
CIF Banks Recycled
Other sources

d. Social audit certificate

Process description
Record of variations, if any

Signatures of the President, Secretary and Treasurer

Community Investment Fund

Utilization Certificate by the Mandal Samakhya {SPIA)

Details of the activities undertaken by SHGs and vOs (consolidated) and self for the quarter !, !!, !!!,
!v of the FY __________
Name of the NS:
a. Classification of SHGs and source of funds
Type of SHG No. Own
CIF Bank
Other sources

b. Activity wise utilization of funds
Source of funds Sl.No Name of the
No. of
CIF Bank Recycl
ed CIF
SHG Micro plans
! Agriculture
!.1 Crop cultivation
1.2 Bore-well
1.3 Pump-set
1.+ Bullock and cart
1.+ Others
Sub Total
!! Animal

!!.1 Nilch animals
!!.2 Sheep and goats
!!.3 Others
Sub Total
!!! Non-farm
!!!.1 Production

!!!.2 Service

11!.3 Business

Sub Total

Community Investment Fund

VO plans
!v Food security
v Narketing
v! Social

v!! Productive

Grand Total

a. Category wise utilization of funds:
Source of funds
Own funds
of SHGs
CIF Banks Recycled
Other sources

b. VO wise utilization of funds:
Source of funds Name of the
VO Own
funds of
CIF Banks Recycled
Other sources


Signatures of the President, Secretary and Treasurer


Micro Finance

3.4 Micro Finance, SHG Bank Linkages and Interest Subsidy


!mprovement in the living standards of the poor is directly proportional to their income levels. !t is
the given capital availability and the market opportunities that enable the poor to choose self
employment options.

Nicro finance can be defined as provision of thrift, credit and other financial assistance to the poor
for enabling them to raise their income levels and improve their quality of life.


The scheme provides multiple assistances to the SHGs to strengthen them as viable Nicro- finance
institutions of long-term stability.

Providing skill and technical assistance in accounts and book keeping systems so that
the members can write their own books of accounts, analyse them and take financial decisions.
The SHGs are facilitated to recruit Master Book Keepers who perform all the functions of an
accountant for the SHG.
Encouraging the SHGs to promote a thrift scheme, which becomes their financial capital and a
revolving fund for the group to lend financial assistance to members themselves
Lending micro credit to the SHGs through SHG-Bank linkage programme. The lending is
provided through several means
1. Financing SHGs directly by banks without any intervention f facilitation of any
Self Help Promoting !nstitution (SHP!)
2. Financing SHGs directly by banks with intervention f facilitation of Non
Governmental Organizations.
3. Financing SHGs directly by banks with intervention f facilitation of Governmental
+. Financing SHGs directly by banks with intervention f facilitation of bank staff
5. Financing SHGs with financial intervention of non governmental organizations
6. Financing SHGs with financial intermediation of NGOsf SHG cluster associations
7. Financing SHGs with financial intermediation of NGOsfNutually Aided Co-
operative Societies.

The Purpose of the Micro Credit Schemes

The micro credit is given to the members of SHGs mainly for the purposes of

Financial assistance to cater their immediate economic requirements - to bear expenditure to
raise crops
Access to financial services to SHG members for setting micro economic activities, micro
Provide market access and promote business activities
!nculcating saving and banking habits among the poor
Enable availing of loan for productive purposes and repaying the same over a period of time
Gaining from collective wisdom in the financial matters in organizing and managing their own
finance and distributing the benefits among themselves

Micro Finance

Preparation of Micro Credit Plan

Since the credit assistance is lending to a group for common economic activities, Preparation of a
Nicro credit Plan is a necessity by the SHG. The Nicro Credit plan is prepared at various levels by the
SHG, village organisation and the Nandal Samakhyas detailing the credit needs and proposed fund
utilisation patterns at different levels. The micro credit plans help the banks to assess the overall
credit needs of their geographical territories. The plan also helps the respective institutions to decide
the lending priorities. !t also has to detail livelihood promotion, serving the range of needs of all
members on priority basis and collective commitment and accountability of members for the
resources. The credit requirements of the SHG will be the major component of the micro credit plan.

!t is very important to note that Nicro Credit Plan should not be viewed as a document merely
prepared for raising funds either from the Banks or from !ndira Kranthi Patham .
Since Nicro Credit Plan is a quality improvement tool, it has to be prepared and implemented by
all SHGs irrespective of their need for external funds.

NCP is not a one-time exercise, but a dynamic one incorporating the timely requirements and
changes. !t should be seen as a revolving plan
Rates of Interest: The rate of interest will be decided by the banks f financial institutions which finance
SHGs under SHG - Bank Linkage program with in the scope of RB! Directives. The rate of interest of
lending within the group will be decided by the group members which usually ranges from 12-2+

Repayment of Loan: The repayment installments and the schedule is fixed as per the bank's
interest rates and the groups credit rating. Normally loan repayments get extended up to 5 years
depending upon the banks discretion, which is however decided in the interest of the SHG.

{I) Schemes under SHG Bank Linkage

1. Saving scheme: !n this scheme the beneficiary has to make compulsory savings of Rs. 1 per
day, or more depending on the economic status of the members. The members can use this
amount towards lending within the group to meet the emergency needs of the member.
2. Credit scheme: Under credit scheme, the beneficiary can get a credit for the following
activities in the form of on lending as well as grant.
Activities that can be pursed on lending
!ncome Generation activities like Diary development, selling the agricultural products, etc
Rice Credit Line Scheme (a programme for ensuring food security to the members
through out the year)
3.Schemes as grant from CIF (Livelihood analysis involving both POP and Non - POP
households would be the basis for funding for all Self Help Groups under SHG - Bank Linkage
Programme and Community !nvestment Fund - Sub Projects)
Social development activities (gender issues, empowering the youth etc)
Physical !nfrastructure (establishment of procurement centers, drying platforms etc)

Eligibility Criteria of a SHG for Bank Loan

1. The beneficiary should be a member of a SHG
2. The group should exist actively for minimum period of six months.
3. The group should undertake successfully savings and credit operation from its own resources.
+. The group should be democratic in nature, where members have a say in all matters.
5. The group should maintain proper accounts f records.
6. The group should convince the banker that the group has formed with an intention to help
each other and not just to participate in the project and avail benefits.

Micro Finance

7. The SHG members should preferably have homogeneous background and interest.
Homogeneity in form of the following
Forming groups of women
People who live in the same neighborhood, having similar social background and
engaged in a similar occupation
8. The members should have a common interest to generate livelihood for improving the life of
the members.
9. The group should acquire training on skill up gradation to function properly to function.
10. The group should fulfill the membership requirements, like
The size of the group should be between 15 to 20
The member should be not less than 18 years of age and not more than 55 years of age
The member should be aware of the rights and obligations of membership

Terms and conditions under Bank Linkage:

The banks will give loans to groups and not to individuals
The group cannot lend the loan amount to another group
The bank will provide credit directly to the SHG in bulk. The group would undertake on lending to
the members. On-lending means the SHG gets the money from the bank and lends it to the
members as per the need assessment done by the SHG
Only the SHGs with `A' category rating will get a bank loan (rating as per Credit rating index to be
done by SHG and CR! is available with the vOfNS)
The banks f financial institutions will give minimum loan amount equal to 2 times the savings of
the group to the maximum of 6 times to the savings depending on the assessment of the SHG by
the bank f financial institutions. Greater the degree of confidence of bank on the SHG, greater
could be the proportion of loan. The activities or purposes and size of loans that the group
proposes to want are left to the needs and their funds management capabilities.
The banks will continue giving loans to the SHG under certain identified key performance areas
of the group. They are
Proper book Keeping by the SHG
Timely repayment of loan amount
Attending the SHG meetings regularly
Using the loan amount judiciously so as the money rotates continuously

How to avail the schemes?

1. The SHG with the help of vO approach the Service area Branch to open an account in the
Group's name
2. The group can avail the loan of minimum of R.10, 000f- and a maximum of Rs.+ Lakhs
without collateral security
3. Once the loan is completely repaid, the 2
linkage in with the bank is made possible

{II). Scheme under SHG Bank Linkage: Interest Subsidy {Pavala Vaddi)

This scheme was started during the year 200+-05 with an objective of providing interest
subsidy on the loans taken by the Self Help Groups. The scheme is applicable to all loans
extended by banks on or after 1st July 200+, under SHG Bank Linkage Programme. The
incentive will be in the form of reimbursement of interest whatever is above 3 interest
irrespective of bank interest rates. The subsidy shall not include penal interest, liquidated
damages etc., paid to the bank.


To reduce the financial burden on SHGs, the government is giving a subsidy on the interest
for the loans taken by the group under SHG Bank Linkage Scheme

Micro Finance

Scheme Details

Reimbursement of the interest paid by the SHG over and above 3 per annum
irrespective of bank interest rates
DRDA releases the interest Subsidy to the groups by way of Cheque and also obtaining
the utilization certificates

Eligibility Criteria
1. A SHG will be eligible for ` Pavalla vaddi scheme' of the Government, if it repays the entire
loan amount on time. (For example if a SHG has to pay say, Rs 100 back to the bank, with
the principal and the interest combined, which it does on time, then the bank will pay back
Rs 75 to that SHG. The Bank will get back its Rs75 from the Government).
2. All the SHG Groups on the loans extended by the Banks on or after 1-07-0+
3. All the vOs who have been provided loans by the banks on or after 1-07-0+


State Revolving Fund

3.5 State Revolving Fund

As a link programme to the SGSY Funds Scheme, the Government of Andhra Pradesh has introduced
a revolving fund scheme to provide a subsidy together with a bank credit component as a corpus for
the SHGs. A sum of Rs. 10,000 is provided as subsidy on a loan of Rs. 25,000 as a one-time
assistance to the SHG to utilize this fund as a revolving fund for helping the members of the SHG.
The SHG will qualify for this fund in case of prompt payments of the loan taken under the Bank
Linkage Scheme.

The Revolving Fund is provided to the groups to augment the group corpus so as to enable the
members to access loans from among the group to meet their individual needs.
The Revolving Fund imparts credit discipline and financial management skills to the members, so that
they become creditworthy and bankable in the eyes of the bank.
The Revolving Fund imparts credit discipline and financial management skills to the members so that
they become credit worthy

Scheme Details
Every SHG that is in existence, at least for a period of six months and which has demonstrated the
potential of a viable group will receive a loan of Rs.25, 000f- from banks as cash credit facility. Of
this, a sum of Rs.10, 000f- is given as a subsidy and the banks charges interest only on the sum
exceeding Rs. 10,000f-.

Eligibility Criteria
SHGs that are in existence for at least for a period of six months and have demonstrated their
successful existence, will receive financial assistance under the scheme

Processing steps By Banks {Commercial, RRB)
1. The SHG will be allocated the Funds depending on the Seniority (Age) of the Groups
2. The fund is allocated to the Group AfC

Initiatives to be taken by SHGs
1. Open a Savings Bank Account in any of the Commercial f RRB (Regional Rural Bank)
2. Compulsory saving of Re. 1 per day per person.
3. As the revolving fund become part and parcel of the group corpus, the group should follow same
norms for utilization as in the case of their own saving fund.
The group should discuss the credit requirements of the members and advance loans
from out of the corpus (savings+ interest subsidy + revolving fund) to a few members
and fix repayment schedule and interest rates.
From the amounts recovered from the members, other members could be covered
The revolving fund can be used by the group for purchase of raw materials, marketing or
infrastructure support for income generating activities.
!t can alternatively be used for lending to individual members for their own purposes.
The members shall inculcate the habit of prompt and full repayment of the loans to the
group taken by them from the revolving fund.
Records to be maintained
1. Resolution for formation of self help group
2. Cash book
3. Ledger
+. Savings afc
5. Loan afc
6. Ninutes of the meeting