What changed
RBI issued a master circular consolidating all existing guidelines on the SHG-Bank Linkage Programme as of March 31, 2024. No new policy changes were introduced; the circular merely compiles previous instructions into a single document for easier reference.
What it means for you
Banks must now refer to this single master circular for all SHG lending norms, ensuring uniformity. The emphasis on meeting full credit requirements—including income generation, social needs, and debt swapping—remains unchanged. Simplified KYC and flexible loan ratios (up to 1:4 savings-to-loan, with discretion for matured SHGs) continue to apply, reducing compliance burden.
What you must do
- Update internal policies to align with the consolidated master circular on SHG-Bank Linkage.
- Ensure all branches include SHG lending in block, district, and state credit plans.
- Train staff on simplified KYC procedures for SHGs as per Master Direction on KYC.
- Adopt hassle-free lending processes with minimal documentation for SHGs.
- Monitor that SHG credit covers income generation, social needs, and debt swapping as per budget announcement.
Who it affects
All Scheduled Commercial Banks, SHG members and women-led groups, Bank branch managers handling rural credit, NABARD and other rural finance institutions
Can unregistered SHGs open savings accounts?
Yes, both registered and unregistered SHGs can open savings bank accounts, even if they haven't availed credit earlier, subject to simplified KYC norms.
What is the maximum loan-to-savings ratio for SHGs?
Loans can range from 1:1 to 1:4 of savings. For matured SHGs, banks may lend beyond four times savings at their discretion.
Does this circular introduce any new requirements?
No, it consolidates existing guidelines up to March 31, 2024. Banks should continue following previous instructions on SHG financing.