📜 Read the original circular — full text as issued by RBI
RBI/2007-2008/65
RPCD.SP.BC. No 10 /09.01.01/2007-08
July 2, 2007
All Commercial Banks
Dear Sir,
Master Circular on Priority Sector Lending- Special Programmes-
Swarnajayanti Gram Swarozgar Yojana (SGSY)
Please refer to our Master Circular RBI/2005-06/51; RPCD.No. SP.BC.13/09.01.01/2005-06
dated July 12, 2006 on Swarnajayanti Gram Swarozgar Yojana (SGSY).
To enable the banks to have current instructions at one place, an up-dated
Master Circular incorporating all the existing guidelines/instructions/directives
on the scheme has been prepared and is enclosed. We advise that this Master
Circular consolidates all the circulars on the subject issued by Reserve
Bank of India till date as indicated in the Appendix.
Please acknowledge receipt.
Yours faithfully,
(G.Srinivasan)
Chief General Manager
MASTER CIRCULAR
PRIORITY SECTOR LENDING - SPECIAL PROGRAMMES
Contents
SWARNJAYANTI GRAM SWAROZGAR YOJANA (SGSY)
1. The Scheme
2. Skill Up-gradation
3. Activity Clusters, Key Activities
4. Self Help Groups (SHGs)
5. Definition of Family and Wilful Defaulter
6. Revolving Fund
7. Lending Norms
8. Assistance to IRDP Borrowers
9. Insurance Cover
10. Security Norms
11. Subsidy
12. Post Credit Follow up
13. Risk Fund for Consumption Credit
14. Repayment of Loan
15. Recovery
16. Refinance of SGSY Loans
17. Role of Banks and State Agencies
18. Role of DRDAs
19. Deputation of Bank Officials to the DRDAs
20. Supervision and Monitoring
21. Service Area Approach
22. Submission of Data
23. Credit Mobilisation Targets
24. LBR Returns
25. Clarifications
26. Subsidy - Stipulation of lock-in-period
27. Format of Statements / Returns
Swarnajayanti Gram Swarozgar Yojana (SGSY)
The Ministry of Rural Development, Government of India have launched a
new programme known as ‘Swarnajayanti Gram Swarozgar Yojana’
(SGSY) by restructuring the following existing 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)
Detailed ‘Guidelines’ have been circulated to all DRDAs/Banks
by the Ministry of Rural Development.
1. 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 will be funded by
the Centre and the States in the ratio of 75:25 and will be 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, will be involved in the process of planning, implementation
and monitoring of the scheme. NGO’s 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 will form 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 interalia 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 disabled are covered under the scheme.
The assisted poor families known as Swarozgaris can be either individuals
or groups and would be selected from BPL families by a three member team
consisting of Block Development Officer (BDO), Banker and Sarpanch.
SGSY will focus on vulnerable sections of the rural poor. Accordingly
the SC/ST will account for at least 50 percent, Women 40 percent, and
the disabled 3 percent of those assisted.
2. Skill Up gradation / Training
Once the person or group of persons has been identified for assistance,
their training need also is to be ascertained with reference to Minimum
Skill Requirement (MSR). The assessment regarding technical skills would
be made by line departments and that of managerial skills by the banker,
while scrutinising the loan applications. Swarozgaris possessing skills
will be put through basic orientation programme which is mandatory. This
programme includes elements of book-keeping, knowledge of market, identification
and appraisal, acquaintance with product costing, product pricing, familiarisation
with project financing by banks as well as basic skills in the key activity
identified. It will be for a short duration of not more than 2 days. BDOs,
Bankers and line departments will act as resource persons for imparting
the training. The training expenditure incurred by the training institutions
for both Basic Orientation and Skill Development Training will be met
by DRDAs from out of the SGSY Fund.
For those beneficiaries who need additional skill development/upgradation
of skills, appropriate training would be organized through Government
institutions, ITIs, Polytechnics, Universities, NGOs etc. Swarozgaris
will be eligible for loans under SGSY when they possess Minimum Skill
Requirement, and it will be disbursed only when they have satisfactorily
completed the skill training.
3. 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 activity clusters would be in geographic
clusters of neighbouring villages within reasonable radius. However assistance
is not prohibited for other activities. This is only an enabling provision
for exceptional cases and it is expected that the funding of key activities
will be the norm.
The SGSY Committee will select about 10 activities per block. However,
focus should be on 4-5 key activities, which are identified for training
and micro enterprise development in a cluster approach for larger number
of groups. Care should however be taken that the market is either readily
available or there is a potential for market creation for the products.
The District SGSY committee is empowered to add or delete any activity
in the list of selected key activities with due justification. The DRDAs
shall prepare directory of the selected key activities in the District
(shelf of projects), which will be consolidated at the State level for
preparation of directory of selected key activities.
On farm activities to be assisted would include minor irrigation such
as open dug well/bore/tube well/lift irrigation/check dam etc. Non-farm
activities will 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.
4. Self-Help Groups (SHGs)
The Self Help Groups shall be organised by Swarozgaris drawn from the
BPL list approved by Gram Sabha. The Scheme provides for formation of
Self Help Groups (SHGs), nurturing and their linkages with banks. SHGs
may be an informal group or registered under Societies Act, State Co-operative
Act or as a partnership firm. 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 will be 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.
i) However, in difficult areas like deserts, hills and areas with scattered
and sparse population and in case of minor irrigation and disabled persons,
this number may vary from 5-20. The difficult areas have to be identified
by the State Level SGSY Committee and the above relaxation in membership
will be permitted only in such areas.
ii) Generally all members of the group should belong to families below
the poverty line (BPL). However, if necessary, a maximum of 20% and in
exceptional cases, where essentially required, up to a maximum of 30%
of the members in a group may be taken from families marginally above
the poverty line living contiguously with BPL families and if they are
acceptable to the BPL members of the group.
iii) The Above Poverty Line (APL) members will not be eligible for the
subsidy under the scheme. The group shall not consist of more than one
member from the same family. A person should not be a member of more than
one group. 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. Further, APL members of the SHG shall not become
office bearers (Group leader, Assistant Group leader or Treasurer) of
the group.
iv) 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.
v) The group should maintain simple basic records such as minutes book,
attendance register, loan ledger, general ledger, cashbook, bank passbook
and individual pass books.
vi) In case of disabled persons, the groups formed should ideally be disability
specific, wherever possible; however, in case sufficient number of people
for formation of disability specific groups are not available, a group
may comprise of persons with diverse disabilities or a group may comprise
of both disabled and non disabled persons below the poverty line.
vii) In cases where the size of the SHG is large (as in the case of Neighbourhood
Groups (NHGs) under the Kudumbashree programme of Government of Kerala
where a neighbourhood group can comprise up to 40 members), banks have
been expressing difficulty in extending finance to such large groups.
Hence sub groups within the large group may be considered for financing
by the banks under the SGSY provided they (or the large group) have satisfied
the required grading criteria, possess all the characteristics of a viable
and sustainable group and are found credit-worthy by the banks
In States and Union Territories where the formation of SHGs has not taken
root, banks may continue to extend credit facilities to eligible individual
Swarozgaris.
5. Definition of Family and Wilful Defaulter
The terms ‘Family’ and ‘Defaulter’ for the purpose
of SGSY guidelines have been defined by the Government of India as under:
‘BPL Family’ under the guidelines would be treated as a unit
for the purpose of giving income generating assets. The ‘Family’
would consist of members of a household and united by ties of marriage,
blood and adoption. The family would consist 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 and the existence of two kitchens or two ration cards in the
same house is an indication of two families. Mere declaration by the loan
applicant that he has separated from the family may not be considered
as sufficient document for separate household. It needs to be ensured
that ration card may not be insisted upon while defining the terms, due
to various ground level difficulties faced in its procurement. Banks may
devise their own ways of verifying the facts while taking decision on
the same by inspecting/ visiting the villages in case of doubtful cases.
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”.
It is desirable that wilful defaulters should not be financed under SGSY.
In case wilful defaulters are members of a group, they might be allowed
to benefit from the thrift and credit activities of the group including
the corpus built up with the assistance of Revolving Fund. But at the
stage of assistance for economic activities, the wilful defaulters should
not have the benefit of further assistance until the outstanding loans
are repaid. Wilful defaulters of the group should not get benefits under
the SGSY scheme and the group may be financed excluding such defaulters
while documenting the loan. Further, non-wilful defaulters should not
be debarred from receiving the loan. They may be certified by a team comprising
the BDO or his representative, bank manager and the Sarpanch.
6. Revolving Fund
SHGs that are in existence for about six months and have demonstrated
the potential of a viable group enters 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. 5000/- and a maximum of Rs. 10000/- linked with bank credit. The
banks would sanction credit, which would be in multiples of the group
corpus and could 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. 20000/-
inclusive of previous doses linked with bank credit. The subsidy of Rs.
20000/- released by DRDA will be adjusted against the loan at the end
of the cash credit period on the request of the group.
The group corpus would be 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.
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 available to the members. The revolving
fund imparts credit discipline and financial management skills to the
members so that they become credit worthy. SHGs that have demonstrated
their successful existence, will receive assistance for economic activities
under the scheme.
7. Lending Norms
The size of loan under the scheme would depend on the nature of project.
There is no investment ceiling other than the unit cost i.e. investment
requirement worked out for the project. The loans under the scheme would
be composite loan comprising of Term Loan and working capital. The loan
component and the admissible subsidy together would be equal to total
project cost. Banks may follow model project report set out in key activities
of the districts for finalising the project cost of the Swarozgaris. Under
any circumstance under financing is to be avoided. Swarozgaris will be
given the full amount of loan and subsidy and they will 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.
(i) 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 will 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. 10000/- or Rs. 1.25 lakhs, whichever
is less.
(ii) Multiple doses of credit
Emphasis is laid on multiple dose of assistance. This would mean 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.
Generally, the people who are asset-less and skill-less are poorest of
the poor and get left out under the programme. Such category of people
may require small doses of multiple credit over a period of time coupled
with emphasis on awareness creation, training and capacity building. The
activities which are easier to handle and product is easily marketable
could be identified for such category of people to ensure sustainable
income, so that, they do not fall into debt trap. DRDAs may ensure that
anticipated income as stipulated in the project is realized during the
project period in order to enable the Swarozgaries to cross the poverty
line.
(iii) Interest rates
Loans under the Scheme will carry interest as per the directives on
interest rates issued by Reserve Bank of India from time to time. However,
the rates of interest to be charged on Group loans under SGSY may be linked
to per capita size of the loans so as to mitigate the burden on the BPL
beneficiaries on the analogy of IRDP group loans.
(iv) Loan applications
(a) Time limit for disposal of applications
All loans granted under the scheme are to be treated as advances under
priority sector. 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. To avoid pendency of applications greater coordination of work
at the block level between bankers and Government functionaries is called
for. The gap between receipt of loan applications, their sanction and
disbursement should be minimized and it should be ensured that documentation
process is kept simple to avoid hardship to the beneficiaries and consequent
delay in disposal of applications.
(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 may be vested with adequate discretionary powers to sanction
proposals under the scheme without reference to any higher authority.
8. Assistance to IRDP borrowers
(i)The existing 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.
Banks may also extend credit under SGSY to non-wilful defaulter owing
dues up to Rs. 5,000/- under IRDP. Subsidy available to the existing IRDP
beneficiaries would be restricted to the maximum ceiling prescribed for
the category less the amount already availed by the borrower under IRDP
(ii) Waiver of legal action before referring to DCC for forfeiture of
subsidy under IRDP radesh zation cases:
As per the existing instructions under IRDP, in case of radesh zation
of loan by the beneficiary, a bank branch can adjust the subsidy only
after concurrence of the DCC/DLRC. It has been decided that in case of
IRDP loans, where matters relating to defaults in repayment have been
pending for long, the bank branch may take decision about forfeiture of
subsidy and adjustment of the same against loan after obtaining approval
from the authority at next higher level.
9. Insurance Cover
Insurance cover is available for assets/live stock bought out of the loan.
Swarozgaris are covered under the Group Insurance Scheme as per the details
given at paragraphs 4.35 & 4.36 of the SGSY guidelines. 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 60 years of age.
The insurance coverage, however, would be for five years or till the loan
is repaid, whichever is earlier, irrespective of the age of Swarozgaris
at the time of sanction of loan.
10. Security norms
For individual loans upto Rs. 50000/- and group loans upto Rs. 5 lakhs,
the assets created out of bank loan would be hypothecated to the bank
as primary security. In case where movable assets are not created, as
in land-based activities such as dug well, 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, 50000/- and group loans exceeding
Rs. 5 lakhs, in addition to primary 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 at the discretion
of the bank. The upper ceiling of Rs. 5 Lakh is irrespective of the size
of the group or radesh 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.
11. Subsidy
Subsidy under SGSY will be uniform at 30 percent of the project cost,
subject to a maximum of Rs. 7,500/-. In respect of SC/STs it will be 50
percent 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. 10000/- or Rs. 1.25 lakhs, whichever is less.
There will be no monetary limit on subsidy for irrigation projects.
Subsidy under SGSY will be back ended. Banks should not charge interest
on the subsidy amount. The availability of the benefit of subsidy to Swarozgaris
would be contingent on the proper utilisation of loan as also its prompt
repayment and maintaining the asset in good condition. The procedure for
operation of Subsidy Reserve Fund accounts as detailed in paragraph 4.17
and 4.24 of the SGSY guidelines may please be followed.
DRDAs will be opening savings banks accounts with the principal participating
bank branches for administration of subsidy. These accounts are to be
reconciled every three months and they will be subject to annual audit.
12. Post Credit Follow-up
Loan Pass books in regional languages may 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.
Banks should ensure through proper monitoring and verification that quality
assets have been procured by the Swarozgaris. Necessary documents relating
to acquisition of assets should be obtained by the bank and also followed
through visits by field staff. In case of non-procurement of assets by
the Swarozgari in spite of reasonable time and opportunity, the bank shall
be free to cancel the loan and recover the money as mentioned in the para
4.10 of SGSY Guidelines. Legal proceedings (Civil/Criminal) wherever necessary
may be initiated against the Swarozgari and against all members in case
of SHG for recovery of loan.
13. 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. 2000/- per
Swarozgari would be provided by the banks. Assistance to the extent of
10 percent of the total consumption loans disbursed by banks to the SGSY
Swarozgaris during the year would be provided out of this Risk Fund. (
para 4.30 of SGSY Guidelines may be referred).
14. 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 will be fixed
as per the unit cost approved by the NABARD/Dist. SGSY Committee. There
will be a moratorium on repayment of loans during the gestation period.
Repayment instalments should not be more than 50 percent of the incremental
net income expected from the project. Number of instalments may be fixed
taking into consideration the principal amount, the interest liability
and the repayment period.
Swarozgaris will not be 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
would be 3, 4 and 5 years respectively. If the loan is fully repaid before
the currency period, the Swarozgaris will be entitled only to pro-rata
subsidy.
15. Recovery
Prompt recovery of loans is necessary to ensure the success of the programme.
Banks shall take all possible measures, i.e., personal contact, organisation
of joint recovery camps with District Administration, legal action, etc
to ensure recovery. In case of default in the payment of loan or the group
becoming defunct or dissolution of the group and in case the bank fails
to recover the entire dues in spite of all possible measures, the process
of forfeiture of subsidy for adjustment against dues may be taken up.
After getting the approval of District SGSY Committee the concerned bank
may adjust the subsidy against the Swarozgaris dues. If the bank is able
to realise any amount subsequently over and above the amount due to it,
the same may be returned to DRDA.
The banks may engage the services of NGOs or individuals (other than government
servants) as monitor-cum-recovery facilitators, on a commission basis.
A processing-cum-monitoring fee of 0.5 percent of the loan amount may
be charged to the Swarozgaris to meet this expenditure. Prompt repayment
at the Swarozgari’s level, will entitle him/her to waiver of the
0.5 percent processing-cum-monitoring fee.
The provision as per Para 4.26 of the SGSY guidelines with regard to stipulation
of 80% recovery in Panchayats under the scheme had been temporarily suspended
by Government of India vide their letter No. I-12011/20/99-IRD credit
dated 16 March 2001. The suspension would continue till further notice.
The State Governments and the banks should continue their efforts for
recovery of loans under the erstwhile IRDP and SGSY to improve the recovery
performance under the scheme.
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 feed back.
16. Refinance of SGSY Loans
Banks are eligible for refinance from NABARD for the loans disbursed under
SGSY as per their guidelines. The eligibility for refinance is related
to the recovery position of the banks.
17. Role of Banks and State Agencies
Banks will be closely involved with Government agencies in implementing,
planning and preparation of projects, identification of key activities,
clusters, self-help groups, identification of individual Swarozgaris,
infrastructure planning as well as capacity building and choice of activity
of the SHGs, grading of SHGs, selection of Swarozgaris, pre-credit activities
and post credit monitoring including loan recovery. The bank has the final
say in the selection of Swarozgaris.
Where banks are involved as facilitators/ Self Help Promoting Institutions
(SHPIs), the amount towards the cost of social mobilisation, training
and capacity building of groups may be decided in the State Level SGSY
Committee keeping in view of the local need and requirements. Further,
payment of the cost of social mobilisation should be based on the stage
of development of the group as mentioned in Para 3.21 of the guidelines.
(ii) Sensitisation programmes
Emphasis is laid on the need for organizing training of bankers and district
and block level officers involved in the implementation of the SGSY scheme.
Banks may, therefore, organize district wise intensive one day sensitisation
camps / workshops for their branch officers.
(ii) SGSY Special Projects
There is a need for more methodical formulation of the special projects
under the scheme so as to bring in the advantages of economies of scale,
faster dissemination of best practices, creating market niches and accessing
export markets etc. and banks may take up special projects under the scheme
on pilot basis.
(iii) Voluntary Retirement Scheme (VRS)
The Central Level Coordination Committee in its meeting held on 3rd June
2002 at Hyderabad, noted that in the post VRS (Voluntary Retirement Scheme)
scenario in banks, there are many States, particularly in the North Eastern
Region, where the implementation of the programme has been suffering due
to lesser number of persons deployed in rural branches of banks. In this
connection, banks are advised to refer to the circular DBOD. BL.BC.3/22.01.001/2001
dated 25 July 2001 wherein it has been indicated that no branch of Public
Sector Banks in general and that in a rural area in particular is closed
due to non availability of staff on account of introduction of VRS and
that lending under various schemes in rural areas is not adversely affected.
The above instructions are reiterated and banks are advised that those
bank branches, which have either been closed or shifted from difficult
areas, should be brought back to the original position, once normalcy
is restored in such areas.
(iv) Participation of banks in block/district level SGSY Committee
meetings
For monitoring the progress under the SGSY scheme, committees have been
constituted at the block level and district level. Bank branch managers
are members of the block level SGSY committee and the Lead Bank Officer
is the convenor at the district level and district coordinators of the
implementing banks are members. Banks should ensure their participation
in the meetings of the block and district level SGSY committees.
(v) Consultation Process
It is necessary to establish a process of consultation and to exchange
/share information between district and block level functionaries with
bankers for smooth implementation of the programme. Government functionaries
should share the information regarding approved BPL lists with banks and
the banks should provide the details of defaulters under IRDP/SGSY loans
to the Government.
18. Role of DRDAs
(i) DRDAs may facilitate in planning of network of SHGs by federating
them at appropriate level, once SHGs have reached the stage of maturity
and have stabilised. DRDAs should put in concerted efforts to strengthen
and consolidate the groups formed by various organisations as some level
of synergy already exists and then take steps to form new groups. The
DRDA shall regularly monitor the progress of the groups through periodic
evaluations. The DRDAs may act as nodal agency for developing database,
which should include SHGs formed under all the schemes to ensure convergence
of various schemes as well as better planning for training and other requirement
of SHGs.
A facilitator working closely with the committees at grass root level
can play a critical role in group formation and development.
DRDAs may support such sensitive support mechanisms in the shape of NGOs
or community based organisations (CBOs) or net work of community coordinators/
animators or a commercial bank/ Regional Rural Banks/ Cooperative banks
functioning in rural areas or a team of dedicated functionaries of the
Government who are fully engaged in the task of initiating and sustaining
the group development process.
With regard to involvement of commercial bank/ Regional Rural Bank/ Cooperative
bank branches functioning in rural areas as facilitators/ Self Help Promoting
Institutions (SHPI), effort should be made to involve only such bank branches
who are committed and have shown keen interest in social mobilisation
of poor people and could take up the responsibility of social mobilisation,
group formation and development of Self Help Groups. Accordingly, such
rural bank branches could be involved as facilitators/SHPIs for social
mobilisation, formation, training and capacity building of SHGs formed
under the scheme. Further, involving banks as SHPIs/ facilitators would
help in credit linkage of groups which is one of the major objectives
of organising SHGs and crucial for socio economic empowerment and sustenance
of groups.
(ii) Linkage with banks & grading exercise
During the stage of group formation, the SHG should be brought into contact
with the local banks through opening of savings bank account preferably
in their service area branch. The BDO and the banker may visit the SHG
as often as they can and explain to the members the opportunities for
self-employment. The DRDAs should involve the bank functionaries also
in the training programme of SHGs.
In case the SHGs have been in existence prior to the SGSY under other
programmes and have completed six months from the date of formation and
it is being brought under the SGSY, such groups may be subjected to first
grading immediately, without waiting for another six months.
For minor irrigation schemes, relaxation of time for the second grading
could be allowed if the group is found credit-worthy and the project is
viable. The decision in regard to the relaxation may be taken by the Block
Level SGSY Committee.
In case the SHG has been in existence prior to the SGSY under other programmes
and has completed one year from its date of formation and it is being
brought under SGSY, the group may be subjected to second grading directly
to assess its eligibility for economic activity without subjecting to
first grading.
The choice of the agency carrying out the grading as well as the criteria
should be to the satisfaction of the bank. It would be desirable that
bank functionaries are involved in the grading exercise of groups functioning
in their service area.
19. Deputation of Bank Officials to the DRDAs
As a measure of strengthening of DRDAs and for promoting a better credit
environment, deputation of bank officials to DRDAs has been suggested.
Banks may consider deputing officers at various levels to the state Governments/DRDAs
in consultation with them.
20. Supervision and Monitoring
Banks may set up SGSY cells at Regional/Zonal Offices.These cells should
periodically monitor and review the flow of credit to SGSY Swarozgaris,
ensure the implementation of the guidelines of the scheme, collect data
from the branches and make available consolidated data to the Head Office
of the bank. The banks should ensure that no query from the field level
remains unattended by the Head Office. Monitoring of the Scheme at the
Head Office level of the bank may be entrusted to a Senior Officer and
the progress of this programme may be reviewed on a regular basis by the
Top Management. Banks should ensure to achieve the credit mobilisation
target set for each financial year without fail.
The Scheme provides for the setting up of SGSY committees at Block/ District/State
and Central level. These committees will hold periodical meetings wherein
the implementation of the scheme will be reviewed and monitored. It is
expected that banks will actively participate in these meetings and maintain
closer co-ordination with the different agencies responsible for the implementation
of SGSY.
The Central Level Co-ordination Committee in its meeting on 07.02.2005
reviewed the performance under the SGSY Scheme and made following recommendations
which were advised to the banks to ensure successful implementation of
the scheme.
1. Powers be delegated to branch Managers for sanction of all SGSY applications
without making any reference to higher authorities.
2. Pending applications should be brought forward and disposed off in
the first quarter of the succeeding year.
3. Banks may explore the possibility of utilising micro-finance institutions
for bridging the credit gap.
4. Banks may take appropriate action to achieve the desired credit to
subsidy ratio of 1:3.
5. Banks may furnish a status report to Ministry of Rural Development
on the under-performance of their branches in lending under the scheme
during the last two years.
6. Banks should maintain separate record for recovery data in respect
of SGSY distinct from IRDP and also utilise the Non-Public Business Working
Day to attend to the problems of Swarozgaris under SGSY also.
21. Service Area Approach
The district SGSY Committee set up under the Scheme has been authorised
to reallocate the villages, which are either not covered by any bank branch
or where the concerned branch is not able to perform for any reason whatsoever.
The district SGSY Committee’s decision on reallocation would 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 will 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 will be 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
(vide circular RPCD. No. BC.117/08.01.00/95-96 dated April 2, 1996 read
with circular RPCD. No. BC. 150/08.01.00-93/94 dated 24 May 1994). Banks
should follow these Service Area Approach guidelines scrupulously.
22. Submission of Data
Close monitoring at all levels would contribute greatly to the effective
implementation of the Scheme. Formats for reporting progress under SGSY
as received from Ministry of Rural Development are given in Annexure 1(2)
to 1(7). The information has to be compiled bank-wise at the block as
well as district level to the corresponding block/district authority by
the concerned bank and also to be used for the State-level information
by substituting district for the block for monitoring and implementation
of the scheme.
Monthly/quarterly progress reports under the scheme may be furnished to
RBI/Ministry of Rural Development, Government of India, New Delhi as per
the monthly/quarterly formats given in Annexures 1 (9) and 1 (10) respectively,
for monitoring the State-wise/bank-wise progress in the implementation
of the scheme. The recovery statement under the scheme may be submitted
as per format given in Annexure 1 (8), on a half yearly basis as at the
end of September/March every year. Banks should maintain separate record
for recovery under SGSY (without mixing it with IRDP). The data for individual
and group loans should also be compiled separately.
The quarterly (cumulative) progress reports and the recovery statement
are required to be submitted within 45 days from the close of the quarter/half
year to which it relates. The monthly cumulative progress report which
has been modified with effect from September 2004 is required to be submitted
within 30 days from the close of the quarter to which it relates. The
modified format is at Annexure 1 (9). Further all the applications pending
at the close the year should be brought forward to the next year and decided
upon. Banks should ensure timely submission of data”. Banks may
include the scheme details and concepts as course contents in the training
programmes for staff members and hold sensitisation programmes on SGSY
wherever necessary to further strengthen the scheme. The review of the
progress under SGSY scheme may be made by the banks at Regional/Zonal/Head
Office on a quarterly basis. A copy of the review note duly approved by
the Board may be forwarded to the Ministry of Rural Development, New Delhi
and Rural Planning & Credit Department, Reserve Bank of India, Central
Office, Mumbai regularly and without any delay.
23. Credit Mobilisation Targets
The State-wise credit mobilisation targets are fixed by GOI every year.
The State-wise targets may be allocated among commercial banks, co-operative
banks and RRBs by SLBCs. The SLBCs should finalise the targets of individual
banks on the basis of acceptable parameters like resources, number of
rural/semi-urban branches, etc., so that each bank will be in a position
to arrive at its corporate target, the achievement of which will be strictly
monitored by RBI. Every effort should be taken by the banks to achieve
the credit target fixed on the above basis.
24. LBR Returns
The Code number for SGSY under LBR reporting system has been allotted
and communicated to the banks. (Vide circular SAA 8/08.01.04/1999-2000
dt.20th January 2000).
Separate guidelines have been issued by the Ministry of Rural Development
indicating the role and responsibilities of the line departments, banks,
NGOs, Swarozgaris. Banks should issue suitable instructions to their controlling
offices/branches for implementation.
25. Clarifications
In regard to the above, some issues have been raised by banks in the operationalisation
of the scheme. These issues together with clarifications are given in
Annexure 1(1).
Operational issues which may arise during the course of implementation
of the scheme may be resolved locally in the Block/ District/State Level
Committees in consultation with officials of line departments keeping
overall content of the scheme in view to ensure that the smooth implementation
of the scheme is not impeded.
Annexure 1(1)
Swarnjayanti Gram Swarozgar Yojana (SGSY) – Clarifications
Annexure 1(1)
Swarnjayanti Gram Swarozgar Yojana (SGSY) – Clarifications
No.
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2007-2008/65 · issued 02 Jul 2007. The plain-English explanation above is BankPulse’s own independent summary.