priority sector lendingsbioabhopal.org/el_book2019/el_pdf/priority sector,cgtmse...ps adv. :...
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H. SULAIMAN (SBIOA)
PRIORITY SECTOR LENDING
Lending to Priority Sectors : Master Cir. : RBI’s Master Circular : updated up to 30.06.2007 :
CCFO/ADV/CL/115/2007-08.
P.S. Adv. : Classification : Revised Guidelines (effective from 20.07.2012) Reiterated : e-Cir/016/
2013-14 :
SSI - All manufacturing, processing/preservation (Micro & Small Enterprises) units with investment
in Plant & Machinery up to Rs. 5 Crore (original cost excluding land, building, etc). Beyond this
investment limit, the units are categorized as C&I (Non-Priority segment). However, all advances
granted to units in Khadi & Village Industries (KVI) Secxtor, irrespective of their size or location,
operation and amount of original investment in plant and machinery are classified as SSI.
SBF - Retail Trading units with credit limits not exceeding Rs. 2 Crore.
SBF - All Micro & Small Service Enterprises whose investment in equipment (original cost excluding
land & building and furniture, fittings etc) do not exceed Rs. 2 Crore and limit not to exceed Rs. 2
Crore. Beyond this cut-off in investment/limit amount, all service enterprises are categorized
under C&I segment.
PS Adv. : Classification : In order to give further impetus to financial inclusion, banks have now
been allowed to classify 100% of the credit outstanding under GCCs (general credit cards ) and
overdrafts up to Rs. 25,000/- (per account) granted against ‘no-frills’ accounts in rural and semi-
urban areas as indirect finance to agriculture sector under the priority sector with immediate
effect : e-Cir/121/2008-09.
Adv. : Classification : Correct Data : Operating units should not do any windowdressing or
misclassification of SME advances as Agriculture advance for the purpose of performance review :
CCFOIADV/CL/335/ 2007-08.
Priority Sector Adv. : Re-classification of Market Segment : Extant guidelines of RBI reiterated :
e-Cir/474/2010-11.
Beyond the prescribed investment limit of SSIs, the units are categorized as C&I (Non-Priority
Segment). However, all advances granted to units in Khadi & Village Industries (KVI) Sector,
irrespective of their size or location, operation and amount of original investment in plant & ma-
chinery are classified as SSI.
Beyond the prescribed investment limit of SBF, the units are categorized as C&I (Non-Priority
Segment).
Credit Facility to SCs & STs : Revised Reporting Formats : Enclosed to CCFO/ADV/CL/337/
2007-08.
SCs/STs : Credit Facilities : Recommendations for increasing the flow of institutional finance to
members of Scheduled Castes / Scheduled Tribes : CCFO/ADV/CL/95/2007-08.
Lending to Minority Communities : Master Circular Issued by RBI : Enclosed to CCFO/ADV/
CL/245/2006-07.
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The Government of India have recently finalised a new Prime Minister’s 15-Point Programme for
the Welfare of Minorities.
Branches should ensure that within the overall target for priority sector lending and the sub-target
of 10% for the weaker sections, sufficient care is taken to ensure that the minority communities
also receive an equitable portion of the credit : CCFO/ADV/CL/245/2006-07.
P.S. Lending : Additional Activities : The activities detailed in e-Cir/646/2009-10 have now been
included within the priority sector.
P.S. Lending : Housing Finance Companies (HFCs) : RBI Directives : e-Cir/711/
2009-10 :
The banks should link the tenor of loans granted by them to HFCs in line with the average portfolio
maturity of housing loans, up to Rs. 20 lakh, granted by the HFCs to the individual borrowers. If it
is not so, they will not be eligible for classification under priority sector.
Housing Loans : Loans up to Rs. 25 Lac, irrespective of location, to individuals for purchase/
construction of dwelling unit per family, excluding loans granted by Banks to their own employees,
are eligible for classification under priority sector : e-Cir/147/2011-12.
The change is applicable to housing loans sanctioned on or after 01.04.2011.
MSMED Act, 2006 : Micro, Small and Medium Enterprises Development Act, 2006 : It was
enacted on 02.10.2006. Revised definition of Micro, Small and Medium Enterprises given in CCFO/
ADV/CL/375/2006-07.
P.S. Lending : MSEs : RBI recently clarified that loans granted by Commercial Banks to Micro
and Small Enterprises (MSEs) (manufacturing and services) are eligible for classification under
priority sector, provided such enterprises satisfy the definition of MSE sector as contained in
MSMED Act, 2006, irrespective of whether the borrowing entity is engaged in export orotherwise : e-Cir/26/2010-11.
P.S. Adv. : Segmental Classifications : SBF : Revised Guidelines : CCFO/ADV/CL/326/2007-08.
SBF is now defined as :
• All advances to retail trade with Fund-Based credit limits as above.
• All loans to Service enterprises, including business enterprises, service providers, transport
operators, professionals with investment in equipment as above.
An illustrative (not exhaustive) list of SBF activities is given below :
• Hospital, Diagnostic Centres, etc.
• CA, CS, Advocate, etc. (who are doing Private practice).
• Vehicle Service Centres.
• Hotels & Restaurants.
• Tour operators/Travel Agents.
• Petrol Pumps.
• Service providers who provide maintenance & upkeep of buildings, Security, etc.
• All Transport Operators.
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In all these cases, if the investment in equipment and the credit limit is up to Rs. 2 Crore, the loan
account can be classified as SBF : e-Cir/16/2013-14.
The earlier limits of loans to SRWTO up to 10 vehicles, working capital limits to professionals &
self-employed people, etc. do not hold good now.
P.S. Adv. : Retail Trade : Now, there is no separate category for “Retail Trade” under priority
sector. Loans granted by banks for Retail Trade i.e., advances granted to retail traders dealing in
essential commodities (fair price shop), consumer co-operative stores, and advances granted to
private retail traders with credit limits not exceeding the prescribed ceiling are now part of the
Small (Service) Enterprises : e-Cir/646/2009-10.
Loans to State Electricity Boards : To be treated as indirect finance to agriculture : CCFO/ADV/
CL/364/2005-06.
SHGs : Banks should classify loans granted to such SHGs which are engaged in agriculture and
allied activities, as direct finance to agriculture, as long as the bank is able to maintain such
disaggregated data on the SHG/Microcredit portfolio : CCFO/ADV/CL/318/2006-07.
P.S. Lending : Export Credit for Agriculture and Allied Activities : The RBI recently clarified
that loans granted by commercial banks for agricultural and allied activities are eligible for clas-
sification under priority sector, irrespective of whether the borrowing entity is engaged in export
or otherwise. Further, such export credit granted for agricultural and allied activities may be
reported separately under the heading ‘Export credit to agricultural sector’ : e-Cir/99/2010-11.
Priority Sec. Adv. : Produce Marketing Loans : Enhanced Ceilings : As per the revised RBI
Guidelines, w.e.f. 01.04.2012, loans to individual farmers up to 25 Lac against pledge/hypothecation
of agricultural produce (including warehouse receipts) for a period not exceeding 12 months,
irrespective of whether the farmers were given crop loans for raising the produce or not, are
classified as direct agri. advance : e-Cir/534/2012-13.
Indirect AGL Advances : Classification : Loans up to Rs. 1 Crore per borrower to dealers/sellers
of fertilizers, pesticides, seeds, cattle feed, poultry feed, agricultural implements and other inputs
are now eligible to be classified as indirect agri advances for the purpose of priority sector lending
(PSL) : e-Cir/985/2012-13.
Many activities relating to indirect agri portfolio have been recently removed by the RBI from the
purview of the PSL.
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PRIORITY SECTORS :
REVISED TARGETS/SUB-TARGETS
AGL Adv. : Targets : As per extant RBI directives, out of the total agricultural loans disbursed,
40% should go to small and marginal farmers : CCFO/ADV/CL/142/2006-07.
P.S. Lending : Targets : The RBI has advised that some of the banks (SBI included) have not
achieved the prescribed targets : CIRCO/ADV/CL/129/2004-05.
Suggested strategies for achieving targets/sub-targets : CIRCO/ADV/CL/129/2004-05.
Branches should endeavour to achieve the priority sector target and sub-targets under agriculture,
weaker sections and DRI scheme positively. Periodically, a progress report on performance
made by the branches in this regard is to be sent to the LHO through their controllers.
P.S. Adv. : RBI Guidelines : Penalty for non-achievement of benchmarks : Banks failing to
reach the benchmarks under Priority Sector (40% of Adjusted Net Bank Credit) and Agriculture
(18% of ANBC) are penalized as detailed in CCFO/ADV/CL/61/2007-08.
Priority Sector Lending : Targets and Classification : Modifications : W.e.f. 20.07.2012 : e-Cir/
828/2012-13.
Targets for Credit to Priority Sector : SIB/CL/46/1988 :
• Target for P. S. Advances : 40% of adjusted net bank credit (ANBC)* should be given to
priority sector (unchanged : SIB/SSIICL/30/1993-94, ABD/14/1993-94).
• Direct Finance to Agriculture (including allied activities) : It was to reach a level of at least
18% of ANBC* by March 1990: DM/AGR/13/1989.
For the first time, Indian banks were permitted to club indirect agricultural advances with
direct AGL advances for the purpose of computing this 18%. However, Indirect lendings
should not be more than ¼ of total AGL lendings of 18% : ABD/14/1993-94.
• Pvt. Banks : The private banks are also required to meet the priority sector lendings and
other social obligations.
• Foreign Banks : Foreign banks in India have also been asked to take up P. S. lendings.
Foreign banks are at present required to lend up to 32% of their ANBC* to priority sectors.
• Export Finance : No targets/sub-targets as of now (as export finance does not form a part
of priority sector advances).
Sub-Target for Credit to Priority Sector :
Weaker Sections : The advances to the ‘Weaker Sections’ should have reached a level of 25%
of the priority sector advances, or 10% of ANBC* by the end of March 1985 : SlB/SSI/CL/30/1993-
94, ABD/14/1993-94 (unchanged).
DIR Scheme : The banks are required to lend under the Scheme a minimum of 1% of their total
advances outstanding as at the end of the previous year.
AGL Adv. : (Taking into consideration that the ultimate objective of agricultural credit, whether
* The prescribed % of ANBC or, credit equivalent amount of Off-Balancesheet Exposure,
whichever is higher.
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direct or indirect, is to help agricultural production,) it has been decided by the RBI to club the
lendings under ‘direct’ and ‘indirect’ categories of agricultural advances for the purpose of computing
performance of banks vis-a-vis the sub-target of 18% of ANBC* : ABD/14/1993-94.
(With a view to ensuring that the focus of the banks on the ‘direct’ category of agricultural advances
does not get diluted,) it has also been decided that agricultural lendings under the ‘indirect’
category should not exceed 1/4th of the sub-target of 18%, i.e., 4.5% of the ANBC*.
All agricultural advances under the categories of ‘direct’ and ‘indirect’ continue to be reckoned in
computing performance under the overall priority sector target of 40% of the ANBC*.
S&M Farmers : As per extant RBI directives, out of the total agricultural loans disbursed, 40%should go to small and marginal farmers : CCFO/ADV/CL/142/2006-07.
SSI Adv. : Small Enterpries : Sub-target for Small SSI borrowers : (with a view to obviating the
possibility of the most of the bank credit to SSI segment being availed of by comparatively bigger
units,) the RBI have now stipulated the following sub-targets in respect of advances to smaller
borrowers in the SSI segment.
Revised Sub-targets for Lending to MSE Sector : RBI’s Latest Instructions : e-Cir/1046/2012-13 :
Micro & Small Enterprises (MSEs) :
a) 40% of total advances to micro and small enterprises sector should go to Micro (manufacturing)
enterprises having investment in plant and machinery up to Rs. 10 Lac, and micro (service)
enterprises having investment in equipment up to Rs. 4 Lac.
b) 20% of the total advances to micro and small enterprises sector should go to Micro
(manufacturing) enterprises with investment in plant machinery above Rs. 10 Lac and up to Rs.
25 Lac, and micro (service) enterprises with investment in equipment above Rs. 4 Lac and up to
Rs. 10 Lac.
The above break-up of SSI advances is required to be ensured at the whole-bank level.
Other Targets :
Further, in terms of recommendations of the Prime Minister’s Task Force on Micro, Small and
Medium Enterprises (MSMEs) constituted by the Government of India Banks have been advised
to (e-Cir/326/2010-11) :
i) Achieve a 20% year-on-year growth in credit to micro and small enterprises to ensure enhanced
credit flow;
ii) The allocation of 60% of the MSE advances to the micro enterprises is to be achieved in
stages viz. 50% in the year 2010-11, 55% in the year 2011-12 and 60% in the year 2012-13
and
iii) Achieve a 10% annual growth in number of micro enterprise accounts.
RBI has also advised to open more MSE focussed branch offices at different MSE clusters which
can also act as Counseling Centres for MSEs. Each lead bank of a district may adopt at least
one MSE cluster.
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PORTFOLIO CREDIT GUARANTEE SCHME
(PCGS)
PCGS : Portfolio Credit Guarantee Scheme for Micro and Small Enterprises : The Bank has
launched “Portfolio Credit Guarantee Scheme (PCGS)” to obtain guarantee cover, offered by Credit
Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) for the entire portfolio of collateral-
free and/or third-party-guarantee-free credit facility up to Rs. 100 Lac per borrower (Term Loan
plus Working Capital) extended by the Bank to the Micro and Small Enterprises (MSEs). The
details of the Scheme are furnished in e-Cir/215/2009-10.
PCGS : CGTMSE : Implementation of Portfolio Credit Guarantee Scheme : e-Cir/548/2010-11.
The new system of feeding additional information in CBS in respect of loan accounts covered
under CGTMSE guarantee scheme became operational w.e.f. 18.09.2010. To start with, that
particulars in respect of all Credit Guarantee Covered loan accounts opened on or after 01.10.2010
should be invariably entered in the CBS under the new system. Hence, Branches can now fill in
the PGCS screen (if not already done) through the amendment procedure available in CBS.
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CREDIT GUARANTEE FUND SCHEME FOR
MICRO AND SMALL ENTERPRISES (CGTMSE)
CGTMSE : Aide-Memoire : e-Cir/592/2010-11.
CGTMSE : Modifications : w.e.f. 01.01.2013 : Detailed in e-Cir/970/2012-13.
Credit Facilities Eligible under the Scheme :
The Trust covers credit facilities extended in respect of a single eligible borrower not exceeding
Rs. 1 Crore - raised from the earlier Rs. 50 Lac (both FB & NFB-fund-based & non-fund-based),
by way of term loan and / or working capital facilities to all Micro and Small Enterprises covered
under the MSMED Act, 2006. This includes Small Road and Water Transport Operators, Small
Business, Professionals and Self-Employed Persons and all other service enterprises under the
ambit of Micro & Small Enterprises (except Retail Trade) : e-Circular Nos. 214/2007-08, 564/
2007-08; 328, 430/2008-09.
At present, retail trade and the Educational Institutions are not eligible for Credit Guarantee
cover : e-Cir/328, 430/2008-09.
In respect of eligible borrowers already covered under the Scheme to the maximum extent of
Rs. 1 Crore (raised from the earlier Rs. 50 Lac), the Bank may extend additional term loans /
enhanced working capital facilities to such borrowing units by taking collateral security and / or
TPG, if considered necessary, keeping in view the risk perception. The collateral security/TPG is,
however, restricted to the additional loan / credit facility only. In such eventuality, the guarantee
cover already extended by CGTSI to the Bank against such borrowing units would continue to
remain in force through its normal tenor.
In case of eligible borrowers already covered under the Scheme up to the maximum credit ceiling
of Rs. 1 Crore (raised from the earlier Rs. 50 Lac) and to whom additional credit facilities are
extended by the MLIs, by taking collateral security and / or TPG, the Clause 11 (ii) of the Scheme
is applicable in case any payments are made by the borrower to the MLI.
For the unit covered under CGTMSE and becoming sick due to factors beyond the control of
management, assistance for rehabilitation extended by the Bank could also be covered under the
Scheme provided the overall assistance is within the credit cap of Rs. 1 Crore (raised from the
earlier Rs. 50 Lac) only.
Conditions for Coverage under the Scheme :
1. No collateral security and / or third-party guarantee has been taken by the Bank.
2. The account has not become bad or doubtful of recovery; and/ or
3. The business or activity of the borrower for which the credit facility was granted has not
ceased; and / or
4. The credit facility has not wholly or partly been utilised for adjustment of any debts deemed
bad or doubtful of recovery, without obtaining a prior consent in this regard from the Trust.
CGTMSE : Coverage : The coverage of the eligible advance accounts under the Scheme, withoutinsisting on collateral security, need to be increased significantly : e-Cir/153/2009-10.
All eligible accounts should be covered under the CGTMSE Scheme : e-Circular/428/2009-10.
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CGTMSE : Collateral-free Loans : The Bank initially made all loans to Micro and Small Enterprises
(MSEs) up to the prescribed limit compulsorily collateral-free, subject to these being found
eligible for cover under the guarantee scheme of CGTMSE, except in cases where the borrower
opts out of the scheme and provides adequate and acceptable collaterals : e-Cir/698/2010-11.
CCTMSE : Mandatory Coverage : Mandatory Guarantee Coverage for MSE Loans up to the
prescribed limit under credit guarantee scheme of CGTMSE : e-Cir/893/2011-12.
The Bank has recently decided that all accounts eligible to be covered under the CGTMSE
scheme should be sanctioned with CGTMSE cover by SMECCCs/RASMECCs/RCPCs/ Branches,
etc. without exception : e-Cir/594/2012-13.
CGTMSE : Primary Security :
Definition of Primary Security in respect of a credit facility means the assets created out of the
credit facility so extended and / or existing unencumbered assets, which are directly associated
with the project or business for which the credit facility has been extended : e-Cir/53/2010-11.
Other Clarifications : As per e-Cir/53/2010-11.
Definition of “Primary Security” reiterated vide e-Cir/599/2012-13 : “Primary Security” in respect
of credit facility shall mean the asset created out of the credit facility so extended and/or existing
unencumbered assets which are directly associated with the project or business for which the
credit facility has been extended (i.e. Land & Building of factory/office/godown which pertains to
the unit and associated with the project/business).
For the purpose of CGTMSE cover, collateral security is defined as any asset owned by third-
party, including third-party guarantee. However, the Bank may obtain the security of any asset
owned by the promoter/owner of the unit (in addition to the assets under finance) which are
considered as primary security by CGTMSE : e-Circular/428/2009-10.
Steps to be initiated to popularise the Scheme : e-Circular/428/2009-10.
CGTMSE : Third-party Guarantee :
Although no third-party guarantee should be taken for loan accounts to be eligible for CGTMSE
guarantee cover, in case the constitution of the borrower is proprietary or partnership, the personal
guarantee of proprietor/partner is not treated as third-party guarantee. Personal guarantee of
directors, where borrower constitution is a company, is treated as third-party guarantee : e-Cir/53/
2010-11.
Credit Facilities Not Eligible forGuarantee Cover under the Scheme :
1. Originally, any credit facility which has been sanctioned with the interest rate more than
3% over the Prime Lending Rate (SBAR).
Interest Rate Cap : As per the revised Clause, any credit facility which has been sanctioned
by Member Lending Institution (MLI), under Credit Guarantee Scheme (CGS), to an eligible
borrower with interest rate more than 4% over its Base Rate (BR) are not eligible for
coverage under the CGS. The above modifications came into effect for the guarantees
approved by CGTMSE on or after 17.12.2013 : e-Cir/1079/2013-14.
2. Credit facilities extended by the Bank jointly with any other institution (exception has
been made where the borrowing units have been extended term credit assistance by state-
level institutions / other financial institutions and the credit facility extended by SIDBI out of
the MSE Fund for North-Eastern Region).
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3. CGTMSE : Retailers : Advances to Retail Traders are not covered by the guarantee cover
as the same are not defined as MSME as per the MSMED Act : e-Circular/638/2008-09.
Lodging of Applications :
1. Application can be lodged with the trust for credit facilities sanctioned in a particular calendar
quarter, latest by the end of the next calendar quarter. For example, application in respect
of credit facilities sanctioned between 01.04.2008 to 30.06.2008 could be lodged with the
Trust latest by the 30.09.2008.
2. In case of renewal of WC facilities, the date of renewal is taken as the date of sanction.
Guarantee Fee & Annual Service Fee :
1. A one-time Guarantee Fee (GF) as per the schedule given in the table below is to be paid
to the Trust by debit to the Bank’s Charges Account. The GF is to be paid within 30 daysfrom the date of approval of guarantee application by the Trust or from the date of first
disbursement of credit extended by the Bank to a borrower, whichever is later.
2. (Earlier, the GF was sought to be recovered from the units by charging the interest @
0.30% over and above the rate applicable to the unit : e-Cir/258/2008-09).
W.e.f. 16.08.2008, the G.F. is paid by recovering it from the unit upfront. In respect of
cases where the Bank has already paid the GF by debit to Charges Account, the earlier
procedure of loading into interest rate structure continue.
3. For loans with limits up to Rs. 2 Lac, the fee is absorbed by the Bank as hitherto : e-
Circular 258/2008-09.
4. In case of borrowers already covered under the Scheme for working capital facilities, the
guarantee fee for additional working capital facilities extended should be levied on pro-
rata basis for the remaining number of years in the block of 5 year period, considering the
any part period in the year, as full year.
The Annual Service Fee (ASF) at specified rate, given in the table below, is to be paid to the
Trust (by debit to the borrower’s accounts) as on March 31 of each year, within 60 days, i.e.,
on or before May 31 of every year. In the event of non-payment of ASF by May 31 of that year, the
guarantee under the Scheme is not available, and liability of the Trust to guarantee such credit
facility lapses.
Credit Limits One-time Guarantee Fee (GF) Annual ServiceNorth-Eastern Others Fee (ASF)
Region, including
Sikkim
Up to Rs. 5 Lac 0.75% 1.00% 0.50% @
Above Rs. 5 Lac to 0.75% 1.50% 0.75%@
Rs. 1 Crore (raised from
the earlier Rs. 50 Lac)
@ ASF in excess of 0.25% p.a. is absorbed by the Bank for all eligible borrowers in North-
Eastern States, including Sikkim.
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(Earlier, the amount of GF and ASF were to be paid to the Trust by means of separate DemandDrafts in favour of CGTMSE, payable at Mumbai.)
CGTMSE : Annual Service Fee (ASF) : As per the new procedure, ASF for the whole bank
branches is required paid to CGTMSE through a single payment from the Corporate Office,
Mumbai, based on the demand raised by CGTMSE. Concerned Circles are debited with their
respective demand of ASF. Discrepancies, if any, in the ASF amount demanded by CGTMSE or
paid by the Bank should be reconciled in due course : e-Cir/871/2009-10.
Extent of Guarantee Cover :
The Trust provides guarantee cover of up to 75% of the amount in default of the credit facility
extended to an eligible borrower, subject to a maximum of Rs. 37.50 Lac per borrower - for loans
up to Rs. 50 Lac.
For loans of more than Rs. 50 Lac and up to Rs. 1 Crore, the guarantee cover is 50% of the
amount in default.
Reduction in Guarantee Cover : w.e.f. 16.12.2013 : CGTMSE has scaled down the extent of
guarantee cover from 62.50% / 65% (depending on the category of borrower/location of the unit/
credit facility) to 50% for loans between Rs. 50 Lac to Rs. 100 Lac irrespective of the category
of borrower/location of the unit/credit facility : e-Cir/1077/2013-14.
Extant of guarantee cover for loans above Rs. 50 Lac to Rs. 100 Lac stands modified accordingly
with the maximum guarantee cover being up to Rs. 50 Lac.
For credit facilities to Micro Enterprises with credit limits up to Rs. 5 Lac and for Micro & Small
Enterprises operated/owned by women, and units located in the North-Eastern Region (including
Sikkim), the coverage is 80% of the amount in default.
The guarantee cover commences from the date of payment of guarantee fee and runs through the
agreed tenure of the term loan in respect of term loan / composite loan. Where working capital
alone is extended, the guarantee cover is valid for a period of 5 years.
How to Apply for Guarantee Cover :
For the Branches, which are connected with a SMECCC/RASMECC, the application should be
entered in the website of CGTSME (www.cgtmse.in) where an officer is given a User ID and
Password.
The branches, which are not linked to any of these CPCs, are required to send the data, in
respect of the unit for which a Credit Guarantee Cover is sought to be obtained, to the Deputy
General Manager (CPC) at their respective LHOs in the format (Annexure -A), both a hard copy
and also by e-mail. All the DGMs (CPC) have nodal officers to enter these applications in the
CGTMSE website : e-Cir/188/2008-09.
Payment of Guarantee Fee :
Once the application is approved by the CGTMSE for Guarantee Cover, the unit is allotted a
unique reference number called CGPAN Number. The system then generates a demand for payment
of Guarantee Fee notified under different CGDAN Numbers. Demand for more than one account
(CGPAN Number) can be clubbed under One CGDAN Number.
The amount of Guarantee Fee and ASF are to be paid to the Trust by means of separate Demand
Drafts in favour of CGTMSE, payable at Mumbai, The Nodal Officer is required to allocate the
payment of the fee (GF 1 ASF) in the website of CGTMSE and generate a Payment Receipt.
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(“Allocation of payments” is a process of linking the payment made with the CGPAN / DAN to
enable CGTSI to appropriate the payments). This payment receipt, Demand Draft and covering
letter (generated by the CGTMSE Website itself) are to be forwarded to CGTMSE where the draft
is realized and the amount appropriated in the respective guaranteed accounts.
Revised Procedure for Payment of Annual Guarantee Fees (AGF) : e-Cir/136/2013-14.
Service Tax : Branches should pay service tax along with annual guarantee fee (AGF) w.e.f.
01.09.2013 onwards, for all guaranteed loan accounts as per Demand Advice Notice (DAN) issued
by CGTMSE at the time of obtaining guarantee cover : e-Cir/706/2013-14.
Branches/operating offices should pay service tax along with AGF only through Vendor Payment
System (VPS), for all guaranteed loan accounts as per Demand Advice Notice (DAN) issued by
CGTMSE at the time of obtaining guarantee cover : e-Cir/795/2013-14.
Payment of Annual Service Fee :
The CGTMSE website generates the details of ASF payable by the Bank (nodal officer-wise) in
respect of all guaranteed accounts every year, as on 31st March. As in the case of GF, here
again the Nodal Officer has to debit the account of all the units and prepare a consolidated
demand draft, allocate the payment in the website of CGTMSE, generate the Payment Receipt,
covering letter and send all these to the CGTMSE. This amount should reach the Trust latest by
the 31st May each year. Remittance is to be made as per the Demand Advice generated in the
CGTMSE Website
Procedure for Allocation of GF / ASF :
• Log in to the Website of CGTMSE
• Go to receipts and payments
• Select Allocate payments from the left dropdown box
• Select GF/ASF from the right dropdown box
• DANS for GF or ASF, as the case may be, will be visible
• Allocate Payments by Checking the PAY boxes; Click on SAVE
• Enter the instrument details and click on SAVE.
• Go to Reports and MIS
• Select RP-Related Reports from left dropdown box
• Select GF/ASF Allocated Report from right dropdown box
• Click on OK
• Print the report and send the report, along with the DDs, to CGTMSE for Appropriation.
(Allocation of Maximum 50 accounts can be done in one go. Therefore, in the event of number of
accounts being more than 50, the whole process needs to be repeated).
CGTMSE : Fees : Absorption of Guarantee Fee (GF) & Annual Service Fee (ASF) by the Bank :
e-Cir/893/2011-12.
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Invocation of Guarantee : Pre-conditions :
1. The guarantee in respect of that credit facility is in force.
2. The lock-in period of 18 months (reduced from the earlier 24 months) from either the date
of last disbursement of the loan to the borrower or the date of payment of the guarantee fee
in respect of credit facility to the borrower, whichever is later, has elapsed.
3. The amount due and payable to the Bank in respect of the credit facility has not been paid
and the dues have been classified as Non-Performing Assets. (please inform the Trust
when the account is classified as NPA) provided the loss in respect of the said credit
facility had not occurred owing to actions/decisions taken contrary to or in contravention of
the guidelines issued by the Trust.
4. The loan facility has been recalled and the legal proceedings have been initiated under
due process of law.
Recall Notice : Mere issuance of recall notice to the defaulting units under SARFAESI Act
cannot be construed as initiation of legal proceedings for the purpose of preferment of
claim under CGS : CCFO/ADV/CL/333/2007-08.
5. The Bank should intimate the Trust before entering into any compromise or arrangement
which may have the effect of discharge or waiver of personal guarantee(s) or security.
Invocation of Guarantee : Henceforth, our branches / operating offices are to indicate the date of
classification of the account as NPA in a particular calendar quarter, by end of subsequent quarter
using the prescribed option in the on-line system in order to improve the claim settlement process :
e-Cir/595/2009-10.
The Branches/Operating offices are to lodge the applications for claim within a maximum period
of one year from the date of NPA if NPA is after the lock-in period, or within one year of lock-in
period, if the NPA is within lock-in Period.
Modification in the on-line NPA updation form and Claim lodgment form : Amended Formats :
enclosed to e-Cir/1078/2013-14.
Claim Settlement :
1. The Trust pays 75% of the prescribed amount payable by the Trust, i.e., 75% of the
guaranteed amount or amount in default, whichever is less, on preferring of eligible claim
by the Bank within 30 days, subject to the claim being otherwise found in order and complete
in all respects.
2. The balance 25% of the amount payable (as mentioned above) is paid on conclusion of
recovery proceedings.
3. The amount realised, if any, from the unit by sale of assets or otherwise should first be
credited in full by the Bank to the Trust before it claims the remaining 25% of the guaranteed
amount.
4. In the event of a borrower owing several distinct and separate debts to the Bank and
making payments towards any one or more of the same, whether the account towards
which the payment is made is covered by the guarantee of the Trust or not, such payments
is deemed to have been appropriated by the Bank to the debt covered by the guarantee,
and in respect of which a claim has been preferred and paid, irrespective of the manner of
appropriation indicated by such borrower or the manner in which such payments are actually
appropriated.
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Guidelines for Lodging Claim :
Claims : The Bank has recently brought out a compendium on “Systematic Approach to Timely
Settlement of CGTMSE Claims” : Enclosed to e-Cir/1163/2012-13.
Important Tips for Operating Officials, including designated officials : Detailed in e-Cir/939/
2013-14.
Please ensure the following prior to lodging guarantee claim :
• The guarantee is in force as on date of claim and the GF and ASF have been paid regularly.
ASF is to be paid till the issue of 1st instalment of the claim to keep guarantee in force.
• Lock-in period of 18 months (reduced from the earlier 24 months) from the date of last
disbursement or the date of issuance of guarantee cover, whichever is later, is completed.
• The borrower’s account is classified as NPA as per norms.
• Date of issue of Recall Notice is furnished.
• Legal Proceedings have been initiated. Furnish the relevant details such as date of initiation
of legal action and legal authority such as DRT / Revenue Recovery Authority / SARFAESI,
etc. to which the legal application is filed. In case of action under SARFAESI, possession
of the security has been taken.
Recall Notice : Mere issuance of recall notice to the defaulting units under SARFAESI Act
cannot be construed as initiation of legal proceedings for the purpose of preferment of
claim under CGS : CCFO/ADV/CL/333/2007-08. The MILs (Member Lending Institutions)
are required to take further action as contained in Sec. 13(4) of the SARFAESI Act : e-Cir/
19/2008-09.
• Forward the claim application form (Annexure - 2), duly filled in, to the Nodal Officer who is
required to apply on-line in the CGTMSE Website.
• The Declaration & Undertaking (as per Annexure - 3), duly signed by Asst. General Manager,
is enclosed with the Claim Application Form.
• Details of subsidy (amount & date of credit) received after date of NPA, if any, availed by
the borrower may also be furnished.
Procedure for Lodging Claim On-line :
1. Log in to CGTMSE website.
2. Select the ‘Claims Processing’ Icon from the main menu.
3. Select Claim for - First Instalment from the two drop-down boxes provided just below the
above icon.
4. Fill in the applications in all respects by giving the CGPAN number of the borrower-unit.
5. Print two copies (one for CGTMSE and one for record) of this filled in application and
submit to the Trust, along with a declaration and undertaking referred above, duly executed
by an Officer not less than the rank of the AGM of the Bank.
CGTMSE : Lodgement of Claims : The applications relating to collateral-free loans sanctioned
under guarantee cover of CGTMSE should be first lodged in the CGTMSE site for obtaining
approval from CGTMSE. After due approval, CGTMSE allots CGPAN number and CGDAN number
and issue Demand Advice Notice (DAN) for each loan account. Once CGTMSE issues DAN,
there is a little or no chance of rejection of the proposal unless branches/operating offices have
provided wrong/incorrect information on the account. Therefore, disbursement in such type of loan
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accounts should be effected only after receiving the DAN. The Guarantee Fee should, thereafter,
be paid within the prescribed time-limit :e-Cir/339/2011-12.
RTGS, NEFT : New System of Payment of Claims : through RTGS/NEFT : w.e.f. 15.10.2012.
Further details furnished in e-Cir/688/2012-13.
Misc. :
CGTMSE : Modifications : CGTMSE now covers credit facilities (Fund-based and/or Non-fund-
based) extended by Member Lending Institution(s) to a single eligible borrower in the Micro and
Small Enterprises sector for credit facility (i) not exceeding Rs. 50 Lac (Regional Rural Banks/
Financial Institutions), and (ii) not exceeding Rs. 100 Lac (Scheduled Commercial Banks and
select Financial Institutions) by way of term loan and/or working capital facilities, without any
collateral security and/or third-party guarantees : e-Circular/636/2008-09.
All proposals for sanction of guarantee approvals for credit facilities above Rs. 50 Lac and up to
Rs. 100 Lac are now required to be rated internally by the Bank and should be of investment
grade. Proposals approved on or after December 8, 2008 are eligible for the coverage up to Rs.
100 Lac.
One-time Guarantee Fee of 1.5% and Annual Service Fee of 0.75% is applicable. All other terms
and conditions of the CGS remain unchanged.
Uniform CIF : All branches/SMECCCs/RASMECCs/Rural CPCs should attach the CIF given in
e-Cir/405/2008-09 as a guarantor in respect of all the accounts where the credit guarantee cover
is available from CGTMSE.
Scrutiny of NPAs : Branches/SMECCs/RASMECCs/SARCs should scrutinise all the accounts,
which have become NPAs and are covered under the credit guarantee of the Trust, and ensure
that the claims are lodged at the earliest : e-Cir/420/2008-09.
CGTMSE : Closure of Guaranteed Accounts under Guarantee Scheme (CGS) : All requests for
closure of the guaranteed accounts to CGTMSE should now be made only through the new
Closure Module in their system. Henceforth, CGTMSE will not entertain any request of closure
of guaranteed accounts by fax / letter, etc. : e-Circular/260/2009-10.
Branches/Operating offices should recover ASF on pro-rata basis in addition to the outstanding
amount while going for closure of a CGTMSE guarantee covered account and credit the ASF
amount in their Charges account. Once Demand Advice Notice (DAN) is generated by CGTMSE,
it has to be paid immediately by debiting to Branch Charges Account : e-Cir/594/2009-10.
CGTMSE : Website : Collateral-free lending to Micro and Small enterprises : Access to CGTMSE
website through SBI Times : e-Cir/778/2011-12.
CGTMSE : Settled Claims : New System of Viewing Details of Remittances Received on Account
of Settled Claims Through CGTMSE Portal : The details can be viewed in CGTMSE Portal by
using Member Login ID and Password provided to respective Operating Offices : e-Cir/622/
2013-14.
CGTMSE : Detailed Roles and Responsibilities of Officials under Existing Branch Set-up : e-Cir/
315/2011-12.
SME Adv. : Repayment Period : The Branches/SMECCCs may grant extension in repayment
period for all term loan accounts with limits up to Rs. 100 Lac, if covered under CGTMSE Scheme,
taking into consideration the useful life of the asset and asset coverage ratio : e-Cir/594/2011-12.
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As per the extant Loan Policy, the maturity of any term loan, including moratorium, should not
normally exceed 8 years except cases under CDR mechanism/rehabilitation approved by the
Bank. In cases where maturity exceeds 8 years, except exempted categories, the administrative
clearance from competent authority has to be obtained.
CGTMSE : Claim Rejection : Many of the claims lodged by the banks get rejected at the time
of settlement of claims because the respective accounts are found irregular ab-initio. In most
such cases, the irregularities are found to have been due to recovery of guarantee fee after full
disbursements of sanctioned credit limits : e-Cir/919/2010-11.
It should, therefore, be ensured at the time of sanction of loan under CGTMSE that the amount of
expected guarantee fee at the prescribed rate is included in the project cost, so that the payment
thereof does not result in any irregularity beyond the sanctioned limits.
CGTMSE : Common Discrepancies : Observed by CGTMSE : Detailed in e-Cir/996/2013-14.
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REFINANCE
Availing Refinance from SIDBI : The Bank has decided to discontinue availment of refinance
from SIDBI under all schemes with immediate effect, till further instructions : CIRCO/CPPC/SIB/
CL/18/2001-02.
Re-discounting of Bills : Bills discounted by NBFCs representing sale of 2/3 wheelers vehicles
may now be re-discounted by banks in view of the substantial increase in the sale of such
vehicles, subject to the conditions detailed vide CIRCO/CPPC/C&I/CL/9/2000-01.
SIDBI BRS : The bills including those pertaining to purchases made by SEBs and public sector
power generation and/or transmission corporation under SIDBI (BRS) may be discounted on an
ongoing basis without any limit : CIRCO/CPPC/SIB/CL/11/2001-02.
IDBI BRS : Revised Stamp Duty under Bills Rediscounting Scheme : W.e.f. 01.03.2004 : CIRCO/
ADV/CL/333/ 2003-04.
IDBI now covers charges like freight, insurance, transportation to the maximum extent of 10% of
the cost of equipment purchased under the BRS, provided the same are included in the bills :
CIRCO/CPPC/C&I/CL/10/2000-01.
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INSURANCE
Insurance : Hyp. Goods : In Haryana Pesticides & Others v/s Bank of Rajasthan ( AIR, March
2004, P&H p. 83), the Punjab & Haryana High Court held that it is for the borrower to get the
hypothecated goods insured in accordance with the covenants of the agreement entered into
with the bank.
Ins. : Collateral Securities : Extant Instructions : Reiterated : CIRCO/ADV/CL/301/2004-05.
Insurance : of Securities other than Transport Vehicles : Style of Policy : The policy
should be taken in the joint names of the Bank and the borrower e.g. SBI and ABC and NOT
SBI A/c ABC (except in the case of tractors/transport vehicles).
If the policy is taken in the single name of the financing bank, the bank will be a party to the
dispute, if any.
Insurance : of Assets Financed by Bank : The insurance policies are required to be obtained in
the joint names of the Bank and the Borrower or in the sole name of the Borrower if the policy
contains the Bank’s clause. Further, in terms of the security documents executed by the borrower,
it is the primary responsibility of a borrower to insure the assets and keep the policy alive; onlyif the borrowers fails to do, the Bank should insure the movables and assets and debit the
charges and premium to the account of the Borrowers : e-Cir/476/2010-11.
Ins. of Transport Vehicles : Style of Policy : The policy should be taken in the single name of
the borrower ONLY (to absolve the bank from any dispute/legal complications in case the vehicle
meets with an accident and/or fined), covering all risks, including riot, strike and malicious damage
risks (S.R.C.C. risks), at the borrower’s cost : SSI/10/1970.
As per the provisions of the Motor Vehicles Act, 1988 (effective from 01-07-1989), there is
automatic transfer of insurance on transfer of ownership of the vehicle.
Insurance : Insurance Waiver Indemnity Letter (in the prescribed format) should now be stamped
for AGL advances up to Rs. 10,000/- also : CIRDO/OP&SP/SP/16/2000-01.
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GOVERNMENT-SPONSORED SCHEMES/PROGRAMMES
GSS : Government-Sponsored Schemes : SGSY, PMRY, SJSRY, SLRS & DIR : Remedial
measures should be taken to ensure even flow of applications in all the four quarters under
various schemes (to prevent bunching at the fag end of the year) : CIRCO/ADV/CL/253/2004-05.
Credit Flow to SCs, STs : Points emerged in the recent meeting of the Parliamentary Committee
on the welfare of Scheduled Castes & Scheduled Tribes : CCFO/ADV/CL/174/2005-06.
Master Circular on Credit Facilities to SCs/STs : enclosed to CCFO/ADV/CL/174/2005-06.
G.S.S. : Submission of Subsidy Claims : Branches should review the situation at their end and
ensure that no claim is pending for submission in case of subsidy-linked schemes : e-Cir/783/
2012-13.
No-Dues Certificate : Service Charge : No service charge should be recovered for issuance of
"No-Dues Certificate" from the beneficiaries of various Government-sponsored schemes : CCFO/
BO/CL/205/2004-05, etc.
Loans to SC/ST : Malpractices : The Parliamentary Committee has recommended that wherever
instances of involvement of middlemen relating to providing advances or other loans sanctioned,
specially to the illiterate persons, including the SCs and STs, come to the notice of the bank
authorities, strict action should be taken against the culprits and defaulting bank employees,
and preventive measures to check occurrence of such instances be taken : CIRCO/ADV/CL/
287/2004-05.
Deendayal Rojgar Yojana : Scheme for Providing Margin Money Assistance to Educated
Unemployed Youth by Government of Madhya Pradesh : To start/set up an industry, service unit
or business : Details: CIRCO/ADV/CL/212/2004-05.
SRMS : Self-employment Scheme for Rehabilitation of Manual Scavengers : The RBI asked
Banks to ensure implementation of the SRMS Scheme by December 31, 2009, and the spillover,
if any (in inevitable cases), by March 31, 2010, in a time-bound manner as per the existing
guidelines : e-Cir/660/2009-10.
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GOVT. - SPONSORED SCHEMES,
OTHER PROGRAMMES, ETC.
ISHUP : Interest Subsidy Scheme for Housing the Urban Poor :
Introduction : Ministry of Housing and Urban Poverty Alleviation, Govt. of India has designed an
interest subsidy scheme as an instrument of addressing the housing needs of the Economically
Weaker Section (EWS) and Low Income Group (LIG) through Jawaharlal Nehru National Urban
Renewal Mission (JNNURM) : e-Cir/816/2009-10.
Important features of the scheme are detailed in e-Cir/816/2009-10.
ISHUP : Revised Income Ceilings : e-Cir/150, 636/2010-11 :
Income Group Average Monthly Household Income as per the Revised Instructions
a) EWS Up to Rs. 5,000/-
b) LIG Rs. 5,001/- to 10,000/-.
The lending institutions should exercise prudence while processing claims under the Scheme,
and to accept Income Certificate only from the revenue authority/competent authority authorized
by the State Government.
ISHUP : Ministry of Housing and Urban Poverty Alleviation, Govt. of India, has designed an interest
subsidy scheme as under to address the housing needs of the Economically Weaker Sections
(EWS) and Low Income Group (LIG) in urban areas : e-Cir/636/2010-11.
Income Group EWS LIG
Average monthly household income Up to Rs. 5,000/- Rs. 5,001 to 10,000
Min size of house 25 Sq. mtrs. 40 Sq. mts.
Max loan amount eligible for subsidy Rs. 1 Lac Rs. 1 Lac
Relaxation in margin and EMI/NMI Ratio : Detailed in e-Cir/636/2010-11.
ISHUP : Changes : in Operating Modalities : e-Cir/953/2010-11.
Fin. Assistance to MFIs : Scheme for Financial Assistance to Banks for Rating of Micro Finance
Institutions : Modifications : Detailed in e-Cir/674/2009-10.
MFIs : Micro-Finance Institutions : Restructuring of Advances : Prudential Guidelines : e-Cir/946/
2010-11.
Adv. to MFIs : Priority Sec. Status : The RBI has recently decided to regulate microfinance
sector as a separate category. Bank credit to Micro Finance Institutions extended on or after, 1st
April, 2011 for on-lending to individuals and also to members of SHGs/JLGs is now eligible for
categorization as priority sector advance under respective categories viz., agriculture, micro and
small enterprise, and micro credit (for other purpose), as indirect finance, provided not less than
85% of total assets of MFI (other than cash, balances with banks and financial institutions,
government securities and money market instruments) are in the nature of “qualifying assets”. In
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addition, aggregate amount of loan, extended for income generating activity, is not less than 75%
of the total loans given by MFIs : e-Cir/243/2011-12.
Fin. to MFIs : Review of Policy of Financing to Micro Finance Institutions (MFIs) : e-Cir/547/
2011-12.
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DRI SCHEME
(DIFFERENTIAL INTEREST RATE SCHEME)
DRI Scheme : Master Cir. : Updated up to 31.03.2009 : e-Cir/56/2009-10.
DRI Scheme : Instructions : The RBI have reiterated the extant instructions on the captioned
Scheme vide CCFO/ADV/CL/30/2005-06.
It is necessary that the scheme be implemented with greater vigour.
Rural Poor : At least ten borrowers per branch per year should be covered under DRI Scheme
for financial assistance to the rural poor : CCFO/ADV/CL/236/2005-06.
Family Income : The RBI on 10.04.2008 raised the annual family income eligibility criteria for
availing loan under DIR Scheme to Rs. 18,000/- (earlier, Rs. 6,400/-) for rural areas and to
Rs. 24,000/- (earlier, Rs. 7,200/-) for Urban and Semi-urban Areas : e-Cir/56/2009-10.
Revised Loan Amount : The Government recently raised the limit of loan under the Differential
Rate of Interest Scheme (from Rs. 6,500/-) to Rs. 15,000/-, and the limit of the housing loan (from
Rs. 5,000/-) to Rs. 20,000/- per beneficiary : CCFO/ADV/CL/79/2007-08.
RBI has recently advised that under the DRI scheme, Banks can provide individual loans up to
Rs. 15,000/- at a concessional rate of interest of 4% p.a. to the weaker sections of the commu-
nity for engaging in productive and gainful activities. In addition, members of SCs/STs satisfying
the income criteria of the scheme can also avail of housing loan up to Rs. 20,000/- per benefi-
ciary over and above the individual loan of Rs. 15,000/- available under the scheme : CCFO/ADV/
CL/337/2007-08.
Target : The target for lending under DRI Scheme continues to be 1% of the previous years’ total
advances as hitherto : CCFO/ADV/CL/79/2007-08.
Non-SGSY SHGs : In order to broaden the coverage under the Scheme, the Bank recently decided
to extend lending under DRI scheme to non-SGSY SHGs provided all the members of SHG meet
individually the eligibility and other criteria under DRI lending : e-Cir/605/2008-09.
DIR : Housing Loan : Extension of Housing Loan under DIR to SC/ST beneficiaries under the
Indira Awas Yojana : e-Cir/765/2009-10.
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PRIME MINISTER ROZGAR YOJANA (PMRY) :
(WITHDRAWN W.E.F. 01.04.2008)
Discontinuance : The PMRY has been discontinued w.e.f. 01.04.2008.
The Govt. of India on 15.08.2008 merged REGP with PMRY to form a new scheme PMEGP
(Prime Minister’s Employment Generaton Programme) - detailed separately.
PMRY : REVISED GUIDELINES (2007-08) :
CIRCULAR LETTER NO. CCFO/ADV/77/2007-08 :
Salient Features :
Prime Minister’s Rozgar Yojana (PMRY) for providing self-employment to educated unemployed
youth of economically weaker sections was in operation since October 2, 1993. The scheme
aimed at assisting the eligible youth in setting up self-employment ventures in industry, service
and business sectors. The scheme intended to cover urban and rural areas.
• Age :
i) 18 to 35 years for all educated unemployed.
ii) 18 to 40 for all educated unemployed in North-East States, Himachal Pradesh,
Uttarakhand and J&K.
iii) 18 to 45 years for Scheduled Castes /Scheduled Tribes, Ex-servicemen, Physically
Disabled and Women.
• Educational Qualification : VIIIth pass. Preference was to be given to those who have
been trained for any trade in Government recognized / approved institutions for a duration of
at least six months.
• Family Income : Neither the income of the beneficiary along with the spouse nor the income
of parents of the beneficiaries was to exceed Rs.1,00,000/- p.a.
• Residence : Permanent resident of the area for at least 3 years.
(Relaxed for married men in Meghalaya and for married women in rest of the country. For
married men in Meghalaya and for married women in rest of the country, the residency
criteria applies to the spouse or in-laws.)
• Defaulter : Should not be a defaulter to any nationalized bank/financial institution/co-operative
bank. Further, a person already assisted under other subsidy-linked Government schemes
was not eligible under this Scheme.
• Activities Covered : All economically viable activities, including agriculture and allied activities
but excluding direct agricultural operations like raising crop, purchase of manure, etc.
• Project Cost : Rs. 2.00 Lakh for Business / Service sector and Rs. 5.00 Lakh for industry
sector, loan to be of composite nature.
If two or more eligible persons joined together in a partnership, project up to Rs. 10.00 Lakh
were covered.
Assistance was limited to individual admissibility.
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Self-Help Groups could be considered for assistance under the Scheme provided :
• Educated Unemployed Youth, who satisfied the eligibility criteria laid down under the
Scheme, could volunteer to form SHG to set up self-employed ventures (Common
Economic Activity).
• A Self-Help Group could consist of 5-20 educated unemployed youth.
• No upper ceiling on project cost.
• Loan could be provided as per individual eligibility taking into account requirement of the
project.
• SHG could undertake common economic activity for wr;ich loan is sanctioned without
resorting to onward lending to its members.
• The subsidy ceiling for Self-Help Group was Rs. 15,000/- per beneficiary, subject to a
maximum of Rs. 1.25 Lakh per Self-Help Group.
• Subsidy could be provided to the SHG as per the eligibility of individual members taking
into account relaxation provided in North-Eastern States, Uttarakhand, Himachal Pradesh
and Jammu & Kashmir.
• Required margin money contribution (i.e., subsidy and margin to be equal to 20 per
cent of the project cost) was to be brought in by the SHG collectively.
• The exemption limit for obtention of collateral security was Rs. 5.00 Lakh per borrowal
account for projects under Industry Sector. Exemption from collateral was limited to an
amount of Rs. 2.00 Lakh per member of SHG for projects under Service & Business
Sectors. Banks could consider enhancement in limit of exemption of collateral in deserving
cases.
• Implementing agencies could decide necessisty of pre-disbursal training for all the
members/majority of the group.
8) Subsidy & Margin Money :
i) Subsidy was limited to 15% of the project cost, subject to ceiling of Rs.12,500/- per
entrepreneur. Banks were allowed to take margin money from the entrepreneur varying
from 5% to 16.25% of the project cost so as to make the total of the subsidy and the
margin money equal to 20% of the project cost.
ii) For North-Eastern States, Himachal Pradesh, Uttrakhand and J&K :
Subsidy @ 15% of the project cost, subject to a ceiling of Rs.15,000/- per entrepreneur
for North-Eastern States, Himachal Pradesh,Uttaranchal and Jammu & Kashmir. Margin
money contribution from the entrepreneur could vary from 5% to 12.5% of the project
cost so as to make the total of the subsidy and the margin money equal to 20% of the
project cost.
iii) The Branches should issue “No-Dues Certificate” to the borrowers when they have
repaid their portion of the loan leaving the subsidy portion : e-Cir/1157/2012-13.
No interest should be charged on the balance portion of the loan which is to be liquidated
out of subsidy.
• Collateral : No collateral for units in industry sector with project cost up to Rs.5.00 Lakh
(the loan ceiling under the PMRY).
For partnership projects under Industry Sector, the exemption limit for obtention of collateral
security was Rs. 5.00 Lakh per borrower account.
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For units in service and business sector, no collateral for project up to Rs. 2.00 Lakh.
Exemption from collateral in case of partnership project was also limited to an amount of Rs.
2.00 Lakh per person participating in the project cost.
• Rate of interest & Repayment Schedule : Normal rate of interest should be charged.
Repayment schedule could range from 3 to 7 years after an initial moratorium as may be
prescribed.
• Reservation : Preference was to be given to weaker sections, including women. Assistance
to SC/ST beneficiaries was to be targeted in such a manner that they are benefitted in
proportion to their population in the respective district/State.
However, the number of SC/ST beneficiaries was not to be less than 22.5% and 27% for
Other Backward Class (OBCs) as was earlier envisaged in the PMRY. In case SC/ST/OBC
candidates were not available, States/UTs Govt. were competent to consider other categories
of candidates under PMRY.
• Training : Each entrepreneur, whose loan was sanctioned, was provided training as per
details given below :
i) For industry sector : Duration : 15-20 working days. Stipend : Rs.750/-.
Training expenditure : Rs. 1,750/-.
ii) For service and business sector : Duration : 7-10 working days. Stipend : Rs. 375/-.
Training expenditure : Rs. 875/-.
• Motivational Campaigns : To improve the success rate of eligible applicants, States/UTs
were allowed reimbursement of cost of counselling and guiding the applicants @ Rs. 200/-
per applicant, for 125% of the allocated target of cases.
• Recovery of Loans :
i) Panchayati Raj Institutions like Gram Panchayats were empowered to identify and
sponsor candidates located in the same area to the District Task Force Committee so
as to ensure disbursement of loan to genuine persons and better recovery of loan.
ii) To reduce the level of sickness/closure of PMRY units, the District Level Selection
Committee/Task Force Committee were made accountable for the proper scrutiny of
applications and selection of viable projects
• Implementing Agency : The District Industry Centres and Directorate of Industries were
mainly responsible for implementation of the Scheme along with the banks.
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PRIME MINISTER’S EMPLOYMENT
GENERATION PROGRAMME (PMEGP)
PMEGP : Prime Minister’s Employment Generation Programme : Master Circular : Updated up
to 30.09.2010 : e-Cir/660/2010-11.
Salient Features :
• Launched by the Govt. of India on 15.08.2008.
• A credit-linked central sector scheme.
• Rs. 15,000 crore estimated total credit flow in the Scheme for setting up of micro enterprises
across the country.
• Rs. 4,485 crore Government subsidy provided.
• 37 lakh additional employment opportunities to be created between 2008-09 to 2011-12 in
rural and urban areas of the country.
• Higher er rate of Government subsidy for marginalized sections of society for promoting
inclusive growth.
• Below Poverty Line (BPL) families also eligible for assistance under the Scheme.
• Rs. 25 Lakh maximum cost limit for project/unit under manufacturing sector, and 10 lakh
under business/ service sector.
• Minimum educational qualification : VIlI pass for manufacturing sector above Rs. 10 Lakh
and above; Rs. 5 Lakh for Business/Service sector.
• Backward and Forward Linkages support for awareness, project formulation Entrepreneurship
Development Programme (EDP) training of two to three weeks duration, marketing support,
electronic tracking of applications of beneficiaries, etc. envisaged.
• Handholding through Rajiv Gandhi Udyami Mitra Yojana for beneficiaries under PMEGP.
• Project Profiles provided for selection of projects by beneficiaries.
• Khadi and Village Industries Commission (KVIC), a statutory body under the Ministry of
MSME, is the single nodal agency for implementation of the Scheme at the national level.
• The scheme is being implemented by KVIC/State Khadi and Village Industries Boards (KVIBs)
in rural area as defined under KVIC Act, and by District Industries Centres (DICs) in urban
and other rural areas.
• E-Tracking System for tracking of loan applications under the scheme : Details furnished in
e-Cir/829/2012-13.
• The KVIC has decided to ensure 100% compliance of e-tracking system by all implementing
agencies viz KVIC, KVIB and DICs w.e.f. FY 2013-14 : e-Cir/206/2013-14.
They have further advised that they will not release Margin Money subsidy in respect of those
applications which have not been processed through e-tracking system. The financing
Branches should accept the applications of PMEGP scheme only if they are entered in the
e-tracking system; otherwise they should reject the application forms outright.
• Special focus with higher rate of subsidy for rural areas under the Scheme. At least, 60 per
cent outlay is earmarked for setting up of projects in rural areas.
• Involvement of Public Sector Banks for expeditious and regular credit flow.
• Dovetailing Credit Guarantee Fund Trust Scheme to help the entrepreneur for collateral security
free loans.
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• The subsidy levels under PMEGP are as under :
Categories of Beneficiaries Under PMEGP Own Contribution Rate of Subisdy(of Cost of Project) (of Cost of Project)
Area Urban Rural
a) General 10% 15% 25%
b) Special (including SC/STs/OBCs/Minorities/ 05% 25% 35%
Women, Ex-servicemen, Physically
Handicapped, NER, Hill and Border Areas)
Margin Money : Revised guidelines for Margin Money (Subsidy Assistance) : Detailed in e-Cir/
704/2009-10.
The KVIC has clarified that Margin Money (subsidy) could be called back in case of detection of
any irregularity, in fulfillment of criteria laid down for the PMEGP scheme, by implementing agencies/
financing branches.
Procedure for claiming Margin Money (Subsidy) : e-Cir/589/2009-10.
SGSY & PMEGP : Subsidy, etc. : Major/serious irregularities in sanction, conduct of loans and
administration of subsidy : e-Cir/831/2013-14.
The Bank takes stern action against concerned employees/officials where misappropriation of
subsidy is observed.
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SWARNAJAYANTI GRAM SWAROZGAR YOJANA (SGSY) :
REPLACED BY NATIONAL RURAL LIVELIHOODMISSION (NRLM) - AAJEEVIKA
Ref. : Master Circular : e-Cir/58/2009-10 : Updated up to 30.06.2008.
The Ministry of Rural Development, Government of India, launched w.e.f. 01.04.1999 a new
programme known as ‘Swarnajayanti Gram Swarozgar Yojana’ (SGSY) by restructuring the following
earlier schemes :
1. Integrated Rural Development Programme (IRDP)
2. Training of Rural Youth for Self-Employment (TRYSEM)
3. Development of Women and Children in Rural Areas (DWCRA)
4. Supply of Improved Toolkits to Rural Artisans (SITRA)
5. Ganga Kalyan Yojana (GKY)
6. Million Wells Scheme (MWS).
SGSY : New Name : The Govt. of India has recently launched National Rural Livelihood Mission
(NRLM) - Aajeevika - by restructuring Swarnjayanti Gram Swarozgar Yojana (SGSY) replacing
the existing SGSY Scheme effective from 01.04.2013 : e-Cir/339/2013-14.
Aajeevika : National Rural Livelihood Mission (NRLM) : Reserve Bank of India has advised that
the loans sanctioned under SGSY (for SHGs) by banks on or after April 1st, 2013 will be covered
under the ambit of NRLM : e-Cir/456/2013-14.
• The Scheme
The SGSY Scheme is operative from 1st April, 1999 in rural areas of the country. SGSY is a
holistic Scheme, covering all aspects of self-employment such as organisation of the poor into
Self-Help Groups, training, credit, technology, infrastructure and marketing. The scheme is funded
by the Centre and the States in the ratio of 75:25 and is implemented by Commercial Banks,
Regional Rural Banks and Co-operative Banks. Other financial institutions, Panchayat Raj
Institutions, District Rural Development Agencies (DRDAs), Non-Government Organisations (NGOs),
Technical institutions in the district are involved in the process of planning, implementation and
monitoring of the scheme. NGOs’ help may be sought in the formation and nurturing of the Self-
Help Groups (SHGs) as well as in the monitoring of the progress of the Swarozgaris. Where
feasible, their services may be utilised in the provision of technology support, quality control of the
products and as recovery monitors-cum-facilitators.
The Scheme aims at establishing a large number of micro enterprises in the rural areas. The list
of Below Poverty Line (BPL) households, identified through BPL census duly approved by Gram
Sabha, forms the basis for identification of families for assistance under SGSY.
The objective of SGSY is to bring the assisted poor families (Swarozgaris) above the poverty line
by ensuring appreciable sustained income over period of time. This objective is to be achieved by
inter alia organising the rural poor into Self-Help Groups (SHGs) through the process of social
mobilisation, their training and capacity building and provision of income-generating assets. The
rural poor such as those with land, landless labour, educated unemployed, rural artisans and
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disabled are covered under the scheme. The assisted poor families, known as Swarozgaris, can
be either individuals or groups and are selected from BPL families by a three member team
consisting of Block Development Officer (BDO), Banker and Sarpanch. SGSY focusses on
vulnerable sections of the rural poor. Accordingly, the SC/ST should account for at least 50%,
women 40%, and the disabled 3%of those assisted.
• Targets
Branches should take adequate steps to achieve the credit targets, minimum subsidy-credit
ratio fixed and maintain per family investment of Rs. 25,000/- : CCFO/ADV/CL/65/
2005-06.
• Eligibility
The list of Below Poverty Line (BPL) households, identified through BPL census duly approved by
Gram Sabha, forms the basis for identification of families for assistance under SGSY. The rural
poor such as those with land, landless labour, educated unemployed, rural artisans, Self-Help
Groups and disabled are covered under the scheme.
• Skill-Upgradation/Training
Once the person or group of persons has been identified for assistance, their training for Minimum
Skill Requirement (MSR) should be ensured.
• Activity Clusters, Key Activities
The focus under the scheme should be on development of activity clusters with emphasis on key
activities identified in the block, both for group as well as individual assistance. The DRDAs
should prepare directory of the selected key activities in the District (shelf of projects), which are
consolidated at the State level for preparation of directory of selected key activities. On-farmactivities to be assisted include minor irrigation such as open dug well/bore/tube well/lift irrigation/
check-dam, etc. Non-farm activities include those activities that result in the production of goods/
services that have ready market.
The unit cost as fixed by the regional Committees of NABARD should be taken into consideration
as indicative cost while fixing the unit cost for the farm sector. In regard to loans falling under
Industry, Service and Business (ISB) Sector, the responsibility of fixing the unit cost and other
techno-economic parameters is of the District SGSY Committee.
• Self-Help Groups (SHGs)
The Self Help Groups are organised by Swarozgaris drawn from the BPL list approved by Gram
Sabha. The assistance (loan-cum-subsidy) may be extended to individuals in a group or to all
members in the group for taking up income-generation activities. Group activities are given
preference, and progressively majority of the funding will be for Self-Help Groups. Half the groups
formed at block level should be exclusively women groups. Self-Help Groups go through various
stages of evolution viz. Group formation, Group Stabilization, Micro Credit stage and Micro
Enterprise Development stage. Under the scheme, generally a Self-Help Group may consist of
10-20 persons. However, in difficult areas identified by the State Level SGSY Committee, this
number may vary from 5-20.
• Generally, all members of the group should belong to families below the poverty line (BPL).
However, deviation to a maximum of 30% in exceptional cases is permitted provided they
are acceptable to the BPL members of the group.
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• The Above Poverty Line (APL) members are not eligible for the subsidy under the scheme.
The BPL families must actively participate in the management and decision-making, which
should not ordinarily be entirely in the hands of the APL families.
The group should operate a group account - preferably, in their service area bank branch, so
as to deposit the balance amounts left with the groups after disbursing loans to its members.
• The group should maintain simple basic records such as minutes book, attendance register,
loan ledger, general ledger, cash book, bank pass-book and individual pass-books.
• The group may be of disability specific or with diverse disability or combination of both
disabled and non-disabled persons below poverty line.
• In cases where the size of the SHG is large, sub-groups within the large group may be
considered for financing by the banks under the SGSY.
• Definition of Family and Wilful Defaulter
• The ‘Family’ consists of members of a household and united by ties of marriage, blood and
adoption. The family consists of husband, wife, dependent parents/sons/daughters/brothers
and sisters. The moment a parent/son/daughter/brother/sister is no longer dependent and
has a separate household, he will no longer be a member of the same BPL family.
• A household, having two kitchens and two ration cards, should not be treated as a family.
The existence of two kitchens or two ration cards in the same house is an indication of two
families.
As far as the term ‘Wilful defaulter’ is concerned, it is defined as “one who is capable of repaying
the loan, but has been defaulting intentionally and not repaying the loan deliberately and wilfully”.
• Revolving Fund
a) SHGs, that are in existence for about six months and have demonstrated the potential of a
viable group, enter the third stage, wherein it receives the Revolving Fund from DRDA and
banks as cash credit facility. The DRDAs may release subsidy, which is equal to the group
corpus with a minimum of Rs. 5,000/- and a maximum of Rs. 10,000/- linked with bank
credit.
The banks should sanction credit, which should be in multiples of the group corpus and can
go up to four times of the group corpus as cash credit facility, based on the absorption
capacity and credit worthiness of the group.
Subsequently, if it is found that the group has not been able to reach the micro enterprise
stage and requires further financial support to continue in the micro finance stage for some
more time, performance of such groups may be got evaluated. In the evaluation, if it is
observed that the group has been successfully utilising the revolving fund, they could be
considered for sanction of further doses of subsidy fund up to a maximum of Rs. 20,000/-
inclusive of previous doses linked with bank credit. The subsidy of Rs. 20,000/- released by
DRDA should be adjusted against the loan at the end of the cash credit period on the
request of the group.
b) The group corpus is defined as the total amount available with the group inclusive of cash
with the group, amount in Savings Bank account of the group, loans outstanding against
members of the group and interest earned on the loans as well as deposits.
c) The revolving fund is provided to the groups to augment the group corpus so as to enable
larger number of members to avail loans and also to facilitate increase in the per capita loan
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available to the members. The revolving fund imparts credit discipline and financial management
skills to the members so that they become creditworthy. SHGs, that have demonstrated
their successful existence, receive assistance for economic activities under the scheme.
• Loan Amount
The size of loan under the scheme depends on the nature of project. There is no investmentceiling other than the unit cost, i.e., investment requirement worked out for the project. The
loans under the scheme are composite loan comprising Term Loan and working capital. The
loan component and the admissible subsidy together should be equal to total project cost.
Under any circumstance under-financing is to be avoided. Swarozgaris should be given the full
amount of loan and subsidy and they have the freedom to procure the assets themselves.
Disbursements up to Rs.10,000/- under Industry, Service and Business (ISB) sector may be
made in cash where a number of items are to be bought.
• Group Loans
Ideally, under the group loaning, the group should take up single activity, but if there is a necessity,
the group could also take up multiple activities under the group loaning. In either case, loan
should be sanctioned in the name of the group and the group stands as guarantee to the bank for
prompt repayment of loan. The group is entitled to subsidy of 50% of the project cost, subject to
per capita subsidy of Rs. 10,000/- or Rs. 1.25 Lakh, whichever is less.
• Multiple Doses of Credit
Emphasis is laid on multiple dose of assistance. This means assisting a Swarozgari over a period
of time with second and subsequent dose(s) of credit enabling him/her to cross the poverty line as
also access higher amounts of credit.
Subsidy entitlement for all doses taken together should not exceed the limit prescribed for that
category. The second and subsequent doses may be granted by the same bank or any other
bank during the currency of first/earlier loan provided the bank is satisfied about the financial
discipline of the first/earlier dose.
• Interest Rate
Loans under the Scheme carry interest as per the directives on interest rates issued by Reserve
Bank of India/the Bank from time to time.
Interest Rates on Group Loans : The rates of interest to be charged on group loans under SGSY
should to be linked to per capita size of the loan (so as to mitigate the burden on the BPL
beneficiaries on the analogy of IRDP group loans) : CCFO/ADV/CL/29/2005-06.
Branches should not pay interest on subsidy amount held in Subsidy Reserve Fund A/c. For the
purpose of charging interest on the loan, the subsidy amount should be excluded : CCFO/ADV/
CL/255/2006-07.
• Loan Application
a) Time-limit for Disposal of Applications
Loan applications under the scheme should be disposed of within the prescribed time limit of 15
days and at any rate not later one month. It should be ensured that documentation process is
kept simple to avoid hardship to the beneficiaries and consequent delay in disposal of applications.
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b) Rejection of Loan Applications
If some loan applications are rejected by the Branch Managers, the reason for rejection should
be clearly recorded on the application form itself and the relevant application should be returned to
the sponsoring authority immediately for their information and further action as they deem necessary.
Branch Managers are vested with adequate discretionary powers to sanction proposals under the
scheme without reference to any higher authority.
• Assistance to Earlier IRDP Borrowers
The earlier IRDP borrowers may also be considered for second/ multiple dose of assistance under
SGSY if they have failed to cross the poverty line because of no fault of theirs.
• Insurance Cover
Insurance cover is available for assets/live stock bought out of the loan. Swarozgaris are covered
under the Group Insurance Scheme. For availing the group insurance coverage by the SGSY
Swarozgaris, the maximum age of Swarozgaris at the time of sanction has to be kept at 60years of age. The insurance coverage, however, is for five years or the loan is repaid, whichever is
earlier, irrespective of the age of Swarozgaris at the time of sanction of loan.
• Group Insurance :
Revision : The amount payable under Group Life Insurance Scheme by LIC to the nominee of the
deceased has been revised (from Rs. 5,000/-) to Rs. 6,000/- in case of natural death, and (from
Rs. 10,000/-) to Rs. 12,000/- in the event of death due to accident : e-Cir/787/2010-11.
• Security Norms
For individual loans up to Rs. 1 Lac (earlier : Rs. 50,000/-) and group loans up to Rs. 10 Lac
(earlier : Rs. 5 Lakh), the assets created out of bank loan should be hypothecated to the Bank as
primary security (now known as “primary collateral security” : e-Cir/395/2009-10).
In case where movable assets are not created, as in land-based activities such as dugwell,
minor irrigation, etc., mortgage of land may be obtained. Where mortgage of land is not possible,
third-party guarantee may be obtained at the discretion of the Bank.
For all individual loans exceeding Rs. 1 Lac and group loans exceeding Rs. 10 Lakh, in additionto primary collateral security such as hypothecation/mortgage of land or third-party guarantee, as
the case may be, suitable margin money/other collateral security in the form of insurance policy,
marketable security/deeds of other property, etc. may be obtained as per the guidelines of the
Bank (e-Cir/395/2009-10). The upper ceiling of Rs. 10 Lakh is irrespective of the size of the
group or per capita loan to the group.
While deciding the limit for collateral security, the total project cost (bank loan plus Government
subsidy) should be taken into consideration by banks.
• Subsidy
Subsidy under SGSY is uniform at 30% of the project cost, subject to a maximum of
Rs. 7,500/-. In respect of SC/STs, it is 50% of the project cost, subject to a maximum of
Rs. 10,000/-.
The group is entitled to subsidy of 50% of the project cost, subject to per capita subsidy of
Rs. 10,000/- or Rs. 1.25 Lakh, whichever is less. There is no monetary limit on subsidy for
irrigation projects.
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Subsidy under SGSY is back-ended. Banks should not charge interest on the subsidy amount.
DRDAs open Savings Bank accounts with the principal participating bank branches for
administration of subsidy. These accounts are to be reconciled every three months and they are
subject to annual audit.
SGSY & PMEGP : Subsidy, etc. : Major/serious irregularities in sanction, conduct of loans and
administration of subsidy : e-Cir/831/2013-14.
The Bank takes stern action against concerned employees/officials where misappropriation of
subsidy is observed.
• Post-Credit Follow-up
Loan Pass-books in regional languages should be issued to the Swarozgaris which may contain
all the details of the loans disbursed to them. Bank branches may observe one day in a week as
non-public business working day to enable the staff to go to the field and attend to the problems
of Swarozgaris.
• Risk Fund for Consumption Credit
The scheme provides for the creation of Risk Fund with 1 percent of SGSY funds at District level.
Consumption loans not exceeding Rs. 2,000/- per Swarozgari are provided by the banks.
• Repayment of Loan
All SGSY loans are to be treated as medium term loans with minimum repayment period of five
years. Instalments for repayment of loan should be fixed as per the unit cost approved by the
NABARD/Dist. SGSY Committee. There should be a moratorium on repayment of loans during
the gestation period.
Repayment instalments should not be more than 50% of the incremental net income expected
from the project.
Swarozgaris are not entitled for any benefit of subsidy if the loan is fully repaid before the
prescribed lock-in period.
The repayment period for various activities under SGSY can broadly be categorised into 5, 7 and
9 years, depending on the project. The corresponding lock-in period are 3, 4 and 5 years respectively.
If the loan is fully repaid before the currency period, the Swarozgaris are entitled only to pro-ratasubsidy.
• Recovery
Prompt recovery of loans is necessary to ensure the success of the programme. Banks should
take all possible measures, i.e., personal contacts, organisation of joint recovery camps with
District Administration, legal action, etc. to ensure recovery.
While reporting the recovery under SGSY, Banks should not add the recovery under IRDP with
that of SGSY. Recovery figures under the SGSY should be maintained/ calculated separately.
Further, within SGSY, advances and recovery of loans under group/individual finance should be
maintained separately to get a proper feedback.
• Service Area Approach
The district SGSY Committee set up under the Scheme has been authorised to re-allocate the
villages, which are either not covered by any bank branch or where the concerned branch is not
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able to perform for any reason whatsoever. The district SGSY Committee’s decision on reallocation
should be placed before DCC for its consideration and further necessary action.
The Service Area branches may be grouped block-wise without disturbing their Service Area
identities or their obligation to prepare Village Credit Plans/Service Area Plans so that borrowers
have the flexibility to approach other branches in a block in the event of inability of the concerned
Service Area branch to adequately meet their requirements.
The primary responsibility for financing borrowers within the Service Area will be that of the
concerned Service Area branch. Borrowers will first approach their Service Area branch for credit
facilities, and in the event of the concerned Service Area branch not being in a position to finance
them, it will be incumbent on it to give a ‘No-Dues Certificate’ to the concerned borrower who
will, then, be free to approach any other branch in the block for credit support. If the Service Area
branches do not issue ‘No-Dues Certificate’ within 15 days from the date of receipt of the application,
the borrower is free to approach any other branch in the block for his credit requirements without
production of ‘No- Dues Certificate’ from the concerned Service Area branch. Banks should follow
these Service Area Approach guidelines scrupulously.
• Reporting
Progress Report : SGSY, SJSRY and SLRS : Submission of data on progress under these
schemes should be obtained/reviewed on a monthly basis, instead of on quarterly basis : CIRCO/
ADV/CL/15/2004-05.
Modified Monthly Format of Progress Report : From the month ended September 2004 onward :
CIRCO/ADVCL/188/2004-05.
Revision in formats for quarterly progress reports : CIRCO/ADV/CL/139/2004-05.
Recovery Statement : The Recovery Statement under SGSY is required to be submitted in the
revised format from the year ended March 2004 onwards : CCFO/ADV/CL/201/2004-05.
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SWARNA JAYANTI SHAHARI ROZGAR YOJANA (SJSRY)(REPLACES S.U.M.E. & PMI-UPEP)
Master Cir. : CCFP/ADV/CL/325/2006-07, e-Cir/628/2009-10.
Launching : The Ministry of Urban Affairs & Employment, Government of India launched in
1997 a rationalised poverty alleviation scheme namely the Swarna Jayanti Shahari Rozgar
Yojana replacing the two earlier schemes implemented by banks (CPP/SIB/32/1997-98) :
i) Scheme for Urban Micro Enterprises under Nehru Rojgar Yojana (SUME).
ii) Prime Minister’s Integrated Poverty Eradication Programme (PMIUPEP).
Components : SJSRY has two components :
A. The Urban Self-Employment Programme (USEP)
B. The Urban Wage Employment Programme (UWEP).
U.S.E.P. : The banks are involved in implementing only the first component, i.e., USEP (The
Urban Self-Employment Programme). The Urban Self-Employment Programme consists of
following :
i) Assistance to individual urban poor beneficiaries for setting up gainful self-employment
venture.
ii) Assistance to groups of urban poor women for setting up gainful self-employment
ventures.
This sub-scheme is named as Development of Women and Children in Urban Areas
(DWCUA).
iii) Training of beneficiaries, potential beneficiaries and other persons associated with the
urban employment programme for upgradation and acquisition of vocational and
entrepreneurial skills is looked after by the concerned department of the State
Government.
A) THE URBAN SELF-EMPLOYMENT PROGRAMME (USEP) :
Eligibility : Under-employed and unemployed urban youth whose annual family income is below
the state-wise poverty line are assisted with Bank’s loan and Government subsidy.
There is no minimum/maximum educational qualification for beneficiaries under this
programme : e-Cir/628/2009-10.
Clarification regarding Family Income furnished separately under ‘Clarifications’.
SCs/STs must be benefitted at least to the extent of the proportion of their strength in the
local population below poverty line : CIRCO/CPPC/SIB/CL/3/2000-2001.
Under the scheme, women are to be assisted to the extent of not less than 30% : CIRCO/
CPPC/SIB/CL/3/2000-2001.
A special provision of 3% is made for the disabled under the scheme : CIRCO/CPPC/SIB/
CL/3/2000-2001.
15% of the physical and financial targets under the USEP at the national level are earmarked
for the minority communities : e-Cir/628/2009-10.
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Project Cost : Maximum : Rs. 2 Lac per eligible person : e-Cir/628/2009-10.
Subsidy : @ 25% of the project cost, subject to a ceiling of Rs. 50,000/- per beneficiary.
Margin : Beneficiary’s contribution : @ 5% of the project cost (as margin money).
Thus, 95% of the project cost is made available by banks (25% subsidy amount and 70% of
project cost as loan sanctioned by bank : e-Cir/628/2009-10).
Residency : Beneficiaries residing in the town for at least 3 years are considered.
Defaulters : The beneficiary should not be a defaulter to any bank (nationalised/co-operative)/
financial institution.
Partnerships : If two or more eligible persons form a partnership, the project with higher
costs can also be covered, provided share of each partner in the project cost is Rs. 50,000/
- or less.
Subsidy under Partnership : It is calculated for each partner separately @ 15% of his
share in the project cost, limited to Rs. 7,500/- per partner.
Each beneficiary is required to contribute 5% of the project cost in cash as margin money.
Application Form/Appraisal/Monitoring/Follow-up/Review/Renewal : The projects
sanctioned by the branches under this scheme are treated as regular loan proposals and
techno-economic feasibility of the project/scheme is required to be ascertained by the
branches and credit decision, depending upon viability of the project/scheme is required to
be taken.
Interview-cum-appraisal form as prescribed for SSI, SBF and Agl./allied agl. activities should be
used for this purpose.
All efforts should be made to ensure that asset quality remains top quality ab initio (from the
beginning).
Format of Loan Application : enclosed to CIRCO/CPPC/SIB/CL/28/2000-01 : CIRCO/CPPC/SIB/
CL/34/2000-01.
Pass-books : Branches should issue Pass-books to SJSRY beneficiaries which should
contain details regarding date and amount of loan sanctioned, subsidy amount, date and
amount of instalments repayable, rate of interest, etc. : CIRCO/CPPC/SIB/CL/32/2000-01.
Collateral : The loans under the Scheme (USEP) do not require any collateral security or
guarantee : e-Cir/628/2009-10.
(Loans sanctioned under SJSRY for individual loans and up to Rs. 50,000/- and Group Loans
up to Rs. 3 Lac do not require any collateral/guarantee : e-Cir/628/2009-10.)
Assets created out of the loan, subsidy and margin money only are hypothecated/mortgaged/
pledged to the financing Bank in such cases.
Documentation : Composite loan agreement is obtained.
Repayment : Repayment schedule may range from 3 to 7 years after initial moratorium of 6
to 18 months as decided by the Bank.
The Community Development Societies (CDS)/Town Urban Poverty Eradication (UPE) Cells
extend help to Bank for ensuring repayment of loans as per rules. Community-based structure
set up by the SJSRY is explained in the Circular.
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Training : The entrepreneurs selected under the scheme are provided training and other
entrepreneurial development assistance by Government. Training is a compulsory input
before disbursement of the loan.
However, this requirement may be waived if a borrower has already received the training from
a registered Non-Government Organisation (NGO)/Voluntary Organisation, or has learnt the
activity such as cobblery, carpentry, etc., or has learnt the trade as an apprentice from a
private/public registered body and requisite certificate to that effect is produced from the Urban
Local body or the private/public registered company, as the case may be.
An illustrative list of activities requiring no special training/special skill as also those exempt
from mandatory training is given in the Annexure-II : CIRCO/CPPC/SIB/CL/32/2000-01.
The guidelines contained in CIRCO/CPPC/SIB/CL/32/2000-01 should be complied with
meticulously : CIRCO/CPPC/SIB/CL/4/2001-02.
Interest : As per the RBI guidelines from time to time for loans under priority sector lendings.
Disposal : In cases where the size of the loan is up to Rs. 25,000/-, the application should
be disposed of within a fortnight, as per the RBI guidelines : CIRCO/CPPC/SIB/CL/3/2000-
2001.
Loans up to Rs. 25,000/- should be disposed of within a fortnight, and those above
Rs. 25,000/- within 8-9 weeks : CIRCO/CPPC/SIB/CL/32/2000-01.
Rejection of Proposals : Detailed separately. Instructions reiterated vide CIRCO/CPPC/
SIB/CL/3/2000-2001.
Nature of Activities : Illustrative list : given in CPP/SIB/32/1997-98, e-Cir/628/2009-10.
Progress Report : Branches should submit the quarterly progress reports in the new format from
the year ending March 2003 onwards : CIRCO/ADV/CL/141/2003-04.
B) DEVELOPMENT OF WOMEN AND CHILDREN IN URBAN AREAS (DWCUA) :
• Objective :
The programme envisages special incentive to urban poor women who decide to set up
self-employment ventures in a group.
Such groups may take up any economic activity suited to their skill, training, aptitude
and local conditions.
DWCUA group consists of at least 10 urban poor women to be eligible for subsidy.
Before starting income generating activity, the group members must get to know each
other well, understand the group strategy and also recognise the strength and the
potential of each member of the group.
The group selects an organizer from amongst the members.
The group should also select its own activity. Care should be exercised in the selection
of activity (because the future of the group rests wholly on an appropriate selection.)
As far as possible, activities should be selected out of an identified shelf of projects for
that area maintained by the Town Urban Poverty Eradication Cell.
In addition, every effort should be made to encourage the group to set itself up as a
Thrift and Credit Society.
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• Financing Pattern :
The DWCUA group society is entitled to a subsidy of Rs. 1,25,000/- or 50% of the cost
of project, whichever is less.
• Identification of Borrowers :
Identification of the group is done by the concerned Community Development Society.
However, success of the scheme depends upon the selection of beneficiaries.
Thus, it is most crucial that the group formed for assistance should reflect a
homogeneous group possessing a spirit of togetherness and similar socio-economic
characteristics.
The group should have mutual understanding in regard to the selection of activity proposed
to be financed by the Bank and should be compatible with their skill, aptitude and
expertise.
• Application Form/Appraisal/Monitoring/Follow-up/Review/Renewal :
The projects sanctioned by the branches under this scheme are treated as regular loan
proposals.
Techno-economic feasibility of the project/scheme is required to be ascertained by the
branches and credit decision depending upon the viability of the project is required to be
taken.
Interview-cum-appraisal form as prescribed for SSI, SBF and Agl./allied agl. activity
should be made use of for this purpose.
All efforts are required to be made to ensure that asset quality remains top quality ab
initio ( = from the beginning).
• Documentation :
Following documents are obtained from the individual members as also from all members
of the DWCUA group on the lines indicated below.
In case the group formed for the purpose is more than 20 in number, a suitable document
is obtained.
a) Letter of consent-cum-guarantee and Hypothecation.
b) Individual loan agreement.
c) An inter se agreement is executed by the members of the group for carrying on a
common business.
• Market Segment :
It is determined depending on the type of activity like SSI, SBF, AGL, etc.
• Discretionary Powers :
The discretionary powers prescribed by the Bank are exercisable.
• Quarterly Report :
Specimen of quarterly report to be submitted to controlling authorities is enclosed to
the Circular.
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Quarterly Report should invariably reach controlling authority within 10 days after close
of the quarter.
C) CLARIFICATIONS REG. S.J.S.R.Y. :
(CIRCO/CPPC/SIB/CL/2/1998-99, SIB/26/1998-99)
I) SJSRY (General) :
• Mini./Max. Age Limit : No age limit is prescribed. Minimum age : 18 years at the time
of applying for bank loan.
• Admissibility of Subsidy : The subsidy is 15% of the project cost, subject to a ceiling
of Rs. 7,500/- per beneficiary (for individual USEP) to be tied with bank loan.
• Definition of Family : Identification of the family is required to be done on the basis of
independent kitchen.
• Coverage :
a) Swarna Jayanti Shahari Rozgar Yojana (SJSRY) is now being implemented in all
areas falling under the jurisdiction of urban local bodies of any category irrespectiveof population size : CIRCO/CPPC/SIB/6/1998-99.
b) Borrowers who have been sanctioned loan/subsidy under erstwhile SUME but have
not drawn the full amount were allowed to take advantage of the enhanced loan/
subsidy amount under SJSRY : CIRCO/CPPC/SIB/6/1998-99.
• Physical Targets : The physical target under the Urban Self-Employment Programme
(USEP) of SJSRY is decided by the State Government in conformity with the guidelines
on the Scheme as also the result of beneficiary survey. Therefore, no physical target is
fixed by Government of India : CIRCO/CPPC/SIB/5/1998-99.
• Fin. Powers : For individual borrowers and partnership firms : Current powers.
• Poverty Line : The Govt. of India have clarified that the ceiling of Rs. 11,850/- as annual
income at 1991-92 price index has no relevance now (in view of the Planning
Commissions’ new methodology for determining the urban property line) : CCO/CPPC/
SIB/02/1998-99.
A copy of the statement showing state-wise poverty line at 1996-97 is enclosed to
CCO/CPPC/SIB/02/1998-99.
The Govt. of India have further advised that the concept of annual income has now been
replaced by the concept of per capita monthly income. Therefore, beneficiaries are to
be identified on the basis of monthly per capita income and not by annual family income.
II) DWCUA Sub-Scheme :
• Loan Component per Beneficiary/Group : 50% of the total project cost for the Group
as a whole.
• Mode of Financing : of 50% of protest cost for DWCUA Group : By bank loans, subject
to provision of 5% as margin money for the Group as a whole.
• Project Cost : per Beneficiary/Group : No maximum ceiling is prescribed.
In cases where the DWCUA Group project cost exceeds Rs. 2,50,000/- the project cost
less subsidy (Rs. 1,25,000/-) and margin money (@ 5% of the project), should be the
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Bank loan component, even if the Bank loan exceeds 50% of the project cost : CIRCO/
CPPC/SIB/6/1998-99.
• Margin Money : per Beneficiary/Group : 5% of the project cost is contributed as margin
money by the Group as a whole.
• Repayment of Loan : Same as under USEP for individual self-employment.
• Family Income : Each member of the Group should fulfil the urban poverty norms as
per new official methodology as decided by Planning Commission. (Statement showing
State-wise poverty lines at 1996-97 price received from Ministry of Urban Affairs and
Employment, GOI, in this regard is furnished in CIRCO/CPPC/SIB/CL/2/1998-99).
The beneficiaries are identified on the basis of monthly per capita income and not by
annual family income : e-Cir/628/2009-10.
III) Administration of Subsidy :
a) After Urban Local Body wise allocation of subsidy for both the components is decided,
the Urban Local Bodies open Savings Bank a/cs captioned as under to which the
allocated subsidy is credited (CIRCO/CPPC/SIB/CL/6/1998-99):
“(Name of the Urban Local Body) Account - SJSRY - Subsidy for Urban Self-Employment
through setting up Micro Enterprises and Skill Development Programme (USEP)”;
“(Name of the Urban Local Body) Account - SJSRY - Subsidy for Development of Women
and Children in Urban Areas (DWCUA), under the Urban Self-Employment Programme
(USEP)”.
The subsidy admissible to the borrowers under SJSRY should be kept in the Subsidy
Reserve Fund Account borrower-wise (instead of in term deposit in the name of the
borrower) : CIRCO/ADV/70/2002-03.
Banks should not pay interest on the Subsidy Reserve Fund Account. In view of this, for
the purpose of charging interest on the loan, the subsidy amount should be excluded :
CCFO/ADV/CL/81/2005-06.
The balance lying to the credit of Subsidy Reserve Fund Account does not form part of
DTL for the purpose of CRR/SLR : CIRCO/ADV/70/2002-03.
b) The banks in which the above-mentioned accounts are opened can be a Nationalised
bank or a scheduled bank.
c) The subsidy amount credited to the above-mentioned accounts is released by the
concerned banks along with the loan amounts. As such, no cheque book is required to
be issued to the Urban Local Bodies with reference to such accounts.
d) Instructions relating to opening/operating of bank accounts are irrevocable and may
not be altered/modified/changed/cancelled/withdrawn without written consent of the
Ministry of Urban Affairs and Employment.
e) The RBI has advised that the subsidy under the SJSRY is back-end subsidy with lock-in
period of two years. The subsidy under the USEP/DWCUA component of SJSRY is to be
treated as back-ended subsidy; the subsidy amount is to be kept in ‘Subsidy Reserve Fund
Account’ and the said amount may be utilized/adjusted towards repayment of the loan at the
time of maturity : CIRCO/ADV/CL/46/2004-05
Interest should be charged only on loan component.
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The amount of subsidy may be adjusted against the defaulted loan only at the end of the
transaction at the time of closure of the loan, provided that :
i) The loan becomes bad and doubtful of recovery in the circumstances beyond the control
of banks,
ii) The appraisal procedure for sanction and disbursement of loan, post-disbursement
supervision, etc., are carried out in accordance with the instructions issued by Head/
Controlling Office, and
iii) The loans are not misutilised. In case of misutilisation of loan, the subsidy is required
to be refunded/not to be claimed by the Bank.
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URBAN WOMEN SELF-HELP
PROGRAMME (UWSP) UNDER SJSRYOperational Details in Regard to Self-Employment (Group)
Through Setting up of Micro-enterprises Under UWSP
Ref. : e-Cir/628/2009-10.
• Identification of Beneficiaries : Only those identified and listed on the basis of survey as
suggested under Annexure-I.
• Eligibility : Urban poor women living below the poverty line, in any city/town. Preferably, the
senior and better-performing urban women self-help group, having credit management abilities
and having skills in the proposed activity, may be accorded thrust.
• Age : Members should be of minimum 18 years at the time of the group applying for Bank
Loan.
• Membership of Group : Minimum number of women in a group is 5.
• Defaulter : Should not be a defaulter to any nationalized bank/financial institution/co-operative
bank.
• Nature of Activities : Any group activity/enterprise development for income generation by
the urban poor women, including the activities mentioned for the Individual enterprises in
Annexure-II.
• Project Cost : No maximum limit.
• Subsidy : Subsidy is provided @ 35% of the project cost, subject to a ceiling of Rs. 3 Lac or
Rs. 60,000/- per beneficiary.
• Margin Money : Groups may be encouraged to contribute 5% of the project cost as margin
money in cash.
• Loan : Loan (excluding the subsidy amount and margin money, if any, from the project cost)
is sanctioned by the banks at rates of interest applicable to such priority sector loans fixed
by the Reserve Bank of India from time to time. The interest should be charged only on the
loan amount.
• Collateral Guarantee on Bank Loans : The loans do not require any collateral guarantee.
Only assets created under the programme are hypothecated/mortgaged/pledged to the bank
advancing the loans.
• Repayment : Repayment schedule ranges from 3 to 7 years after initial moratorium of 6 to
18 months as decided by Bank.
The CDS/Town UPA Cells should extend help to bank for ensuring regular repayment of
loans as per rules.
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SELF-HELP GROUPS
Self-Help Groups : SHG Bank Credit Linkage : Master Circular : Updated up to 31.01.2011 : e-
Cir/81/2011-12.
MFIs/NGOs : Lending : Master Circular : e-Circular/765/2008-09.
Scheme for Lending to MFIs/NGOs : Updated Instructions : Detailed in e-Cir/1283/2012-13.
SHGs : Classification : The advances made to NGOs for non-lending to Self Help Groups,
where all members are undertaking SME activities or majority, say, 90% members are taking up
SME activities, are to be classified under SME Segment : e-Cir/179/2010-11.
SHGs : Interest Cap : The stipulation regarding the spread has since been removed. The
interest rates applicable to loans given by NGOs/MFIs to SHGs may be left to their discretion :
CCFO/ADV/CL/281/2005-06.
Local Book-Writers : The Bank now shares the cost of book-writing paid to the local book
writers engaged in maintaining books of accounts to the extent of Rs. 25/- per SHG per month.
This facility is available to those SHGs only which have been directly credit-linked with our
branches: CCFO/ADV/CL/41/2005-06.
The amount should be paid by debit to 'Branch Charges Account' and credited to 'SHGs loan
account' at the branch.
Incubation Period : The present stipulation of incubation period of 6 months after formation of
SHGs to its credit linking with the bank should be retained : CIRCO/ADV/CL/261/2004-05.
In specific cases, where the operating functionaries consider that the groups have developed
proper group dynamics, requests for credit-linkage before completion of the six months period
may be permitted in the direct SHGs.
Incentive : Incentive of Rs. 750/- per SHG may be extended to NGOs : CCFO/ADV/CL/203/
2005-06.
Further details of the scheme furnished in CCFO/ADV/CL/203/2005-06.
Recovery : Scheme for Outsourcing of recovery in advances through SHGs : CCFO/ADV/CL/
229/2006-07.
SHGs : Bank Credit Linkage : For the last two decades, SHG-BPL has been the most preferred
and viable model for financial inclusion in the country : e-Cir/353/2012-13.
In order to enable Banks to respond to the changing requirements of members of SHGs and to
provide a more flexible approach for SHG financing, NABARD has issued revised instructions
relating to SHG Credit linkage as detailed in e-Cir/353/2012-13.
SHG Bank Credit Linkage : Size : Revised Instructions : The size of the SHG should be preferably
between 10 and 20 members to enable effective individual participation in the group’s deliberations.
However, in hilly tracts/regions and tribal dominated areas, where communities are dispersed, the
minimum size of SHG can be of 5 members. In any case, the SHG should not consist of more
than 20 persons : e-Cir/215/2013-14.
SHGs : Inspection Charges (Per Annum) : Detailed in e-Cir/708/2012-13.
Branches should ensure manual recovery thereof with retrospective effect from all the existing
SHG loans, till such time the system is enabled in this regard.
It is utmost necessary to facilitate opening of new SHG accounts at the branches for ensuring
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uninterrupted flow of credit to SHGs : e-Cir/921/2012-13.
Financial Inclusion : It is delivery of banking services at an affordable cost to the vast section of
disadvantaged and low-income groups.
Fin. Inclusion : Cell Phone Messaging Channel on EKO Platform : Expansion through Individual
BCs : Co-ordination Document : e-Cir/381/2010-11.
SBI’s Fin. Inclusion Centres : The SBI has decidecd to set up 600 Financial Inclusion Centres
across the country by March-end 2011 : BL 07.01.2011.
It will open another 300 FICs by March-end 2012. FICs will provide back-end support to Business
Correspondents as well as control them. The Bank has been assigned 12,421 unbanked villages
for implementing financial inclusion.
SBI Tiny Card Project : The Bank recently developed and launched biometric-enabled, chip-
based Tiny Card to SHGs, as a group, while its members individually will be using existing SBI
Tiny cards : e-Circular/469/2009-10.
Women Self-help Groups : Scheme for Promotion and Support of Women Self-help Groups in
Backward Districts of India : Salient Features : Detailed in e-Cir/295/2012-13.
The Government has now extended the coverage under this scheme to 150 districts in the country
(amended list detailed in e-Cir/442/2012-13).
Out of these 150 districts, the Bank has lead Bank responsibility in 51 districts (detailed in e-Cir/
442/2012-13).
SHGs : Scheme for Financing or Schedules Tribes : Refinance by National Scheduled Tribes
Finance and Development Corporation (NSTFDC) : Salient Features : e-Cir/514/2012-13.
Dormant SHGs : NABARD’S : Incentive Scheme for Tracking and Revival of Dormant SHGs :
e-Cir/1130/2013-14.
MFIs : Rating : Revised Scheme for Financial Assistance to Banks for Rating of Micro Finance
Institutions (MFIs) : CCFO/ADV/CL/108/2006-07.
Revised Scheme for financial assistance to banks for rating of MFIs : Format for submission to
NABARD to claim reimbursement: Enclosed to CCFO/ ADV/C L/292/2007-08.
MFIs, NGOs : Scheme for Financing Micro Finance Institutions / Non-Government Organisations
(NGOs) : With the ultimate aim of developing the Scheme to increase the outreach by financing
large number of Self-Help Groups through a cost-effective model with lesser manpower requirements
for the Bank, a scheme for financing of MFIs/MGOs has been formulated by the Bank. Salient
features of the Scheme are furnished in CCFO/ADV/CL/262/2007-08.
MFIs, NGOs : Revised Instructions : Scheme for financing Micro Finance Institutions (MFIs)/Non-
Government Organisations (NGOs) : Revised and Updated Scheme : enclosed to e-Cir/593/
2008-09.
MFIs/NGOs : Scheme of Financing : The Bank has decided that NBFCs engaged in Micro Finance
activities, which are registered with RBI, are also to be considered eligible to avail advance from
the Bank under the above Scheme : e-Circular/737/2008-09.
Financing MFIs/NGOs : Relaxation : Relaxations made in Master Circular (e-Circular/765/
2008-09 : March 2009) : e-Cir/213/2009-10.
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SHG CREDIT CARD AND SHG GOLD CARD
Ref. : CCFO/ADV/CL/128/2006-07 :
The Bank recently rolled out 2 new products, viz. SHG Credit Card and SHG Gold Card, in all
Circles. Salient features of the Schemes approved are given below :
Objective :
a) To provide hassle-free loan to SHGs for internal lending for consumption as well as economic
activity.
b) To enable SHGs and its members to take up micro enterprises / economic activity.
Eligibility Criteria :
All matured SHGs who have
i) developed proper group dynamics, viz., conduct of meetings, feelings of belongingness,
regularity of internal lendings, book-keeping, transparency and democracy in election of
office bearers, etc.,
ii) reached third level of credit linkage and enjoying a credit limit of Rs. 50,000/-,
iii) repayment in the earlier accounts must be regular, and
iv) at least 2 of the group members should be literate to operate the account.
Preference should be given to the groups pursuing economic activities.
Credit Limit :
Maximum permissible credit limit is :
i) 4 times the corpus of the SHG which includes its savings, interest earned on internal lending
and revolving fund, if any.
ii) Proposal for economic activity requiring higher quantum of finance, may be considered based
on the viability of the proposal.
Margin :
Group corpus is treated as margin and no separate margin should be insisted as in the case of all
SHG loans.
Security :
Hypothecation of the assets created out of the Bank loan.
Documentation :
As applicable to SHGs, and in addition, a request in the application from for issue of card.
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Validity :
The SHG Credit Card / Gold Card is valid for 3 years, subject to satisfactory operation of the
account and annual review by the sanctioning authority. .
Insurance:
The assets created out of Bank’s loan should be insured as per existing instructions of the Bank.
Issue of Card :
a) The cards are named as ‘SBI-SHG Credit Card’ and ‘SBI SGH Gold Card’.
b) The cards contain the details of the group, their account, authorized signatures, names of
the group members, etc. The cards are issued along with pass-books free-of-cost. In case of
any change in the group, a new card is issued incorporating the changes.
Discretionary Powers :
As applicable for SHG loans.
Other Distinguishing Features of SHG Credit Card and SHG Gold Card :
SHG Credit Card :
• Credit Limit : Minimum Rs. 50,000/-.
• Nature of Credit Facility : The credit facility is in the nature of cash credit.
• The SHG can draw the eligible limit and credit the surplus as per their requirement within the
drawing powers.
• At the end of every year from the date of issuing of card, the limit should be reviewed and on
such review branch may continue / enhance / reduce the limit, depending upon satisfactory
conduct of the account and the corpus available.
• When the facility is discontinued, the loan amount should be crystalized and usual steps
taken for recovery.
• No cheque book should be issued. Drawals to be effected by withdrawal slips. Any number
of drawals and credits within the limit are permissible.
• Rate of Interest : As applicable to SHG loans.
SHG Gold Card :
SHG Gold Card is issued only for starting / carrying on economic / income-generating activities.
• Credit Limit : Minimum Rs. 2,00,000/-.
• Nature of Credit Facility : Sanctioned as a Term Loan facility with repayment schedules as
per economic activity financed.
• Rate of Interest : As applicable to SHG loans.
Branches should advise the controller at the end of each month number of cards issued under
both the Schemes, along with aggregate limit sanctioned during and up to the month.