What changed
RBI issued a master circular consolidating all previous guidelines on the SHG-Bank Linkage Programme up to March 31, 2025. No new policy changes were introduced; the circular merely compiles existing instructions for easier reference.
What it means for you
Banks must continue to prioritize SHG financing in their credit plans and ensure hassle-free lending, including for consumption needs. The circular reinforces the need for simple documentation, adequate delegation to branch managers, and savings account access for all SHGs with simplified KYC.
What you must do
- Include SHG lending in branch, block, district, state, and corporate credit plans with top priority.
- Open savings bank accounts for registered or unregistered SHGs using simplified Customer Due Diligence as per KYC Master Direction.
- Sanction savings-linked loans up to 1:4 ratio, with discretion for higher loans to matured SHGs.
- Simplify loan procedures, delegate sanctioning powers to branch managers, and ensure quick disbursement.
- Meet entire credit needs of SHG members for income generation, social needs, and debt swapping as per Budget 2008-09.
Who it affects
All Scheduled Commercial Banks, Branch managers handling SHG accounts, SHG members and women-led groups, NABARD and rural banking operations
Can unregistered SHGs open savings bank accounts?
Yes, both registered and unregistered SHGs can open savings bank accounts with banks, even if they have not availed credit earlier, subject to simplified KYC norms.
What is the maximum loan-to-savings ratio for SHGs?
Banks can sanction savings-linked loans from 1:1 to 1:4 ratio. For matured SHGs, loans beyond four times savings may be given at the bank's discretion.
Does this circular introduce new lending requirements?
No, it consolidates existing guidelines. Banks must still meet the entire credit needs of SHG members for income generation, social needs, and debt swapping as per the 2008-09 Budget announcement.