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<rSqpft3i<Trftqftdris*atgmaurared<fumrcqc qrmt Rr, errc i.24, * ariio,dicrqlcf qffics, di'dr(Td), gcd- 400 051tftr: +91 22-26530084+-dir: +91 22-26528141{*cr : mcid@nabard.org ffic :

www.nabard.org

National Bank for Agriculture and Rural Developmentmicro Credit Innovations Department

Head Office: Plot No.24, 'G'Block,Bandra Kurla Complex, Bandra (E), Mumbai4oo 051

Teli+g1 22 26530084 . Fax: +9'l 22 2652 8141E-mail: mcid@nabard.org . Website: www.nabard.org

Ref.No. NB. MCID / tlrf / Promotional Grant Dormant SHG(Policv) /2OI4-t5Circular wo.2l"V mClD- 2s/ 20L4

04 December 2OI4

The Chairmanf Managing Director/Chief Executive OfficerAll Scheduled Commercial Banks / Regional Rural Banks / State Cooperative Banks

Dear Sir

Incentive Scheme for Tracking and Revival of Dormant SHGs

Please refer to our circular Ref. No. NB. MCID / H-1005/ Promotional GrantDormant SHG(Policy) / 2Ot3-14 dated 29 November 20L3 (Circular no. 251IMCID-L6/20t3) detailing the scheme of providing grant assistance to banks which take upthe work of tracking and revival of dormant SHGs, which is operative upto 31 March20t4.

2. On a review of the scheme, it has been decided to extend the operative"^period of the scheme up to 31 March 20t6 subject to following revisions.

Revival of dormant SHGs which are having outstanding loan account with thebanks which is NPA for 6 months or more only is covered under the grantassistance scheme.

ii. SHGs which are yet to be credit linked but becoming dormant before /afteropening of Savings account is not covered under the grant assistancescheme.

iii. Similarly, SHGs which are unable to avail repeat/renewal of loan, due to thereasons of dormancy, after clearing the outstanding bank loans is also notcovered under the scheme.

iv. The revised scheme of grant assistance would help the banks in reducingNPAs in SHG loan portfolio.

v. Revival of dormancy in an SHG [of the type (i) detailed above] for which SHPI

grant assistance has been availed by the bank previously, would be

ilSqqra>> ud srclstdlTaking Rural India >> Fonrard

considered subject to a lapse of minimum period of 03 years from theclosure of the SHPI project. Needless to add, that SHPI project should havebeen implemented satisfactorily. Similar condition is applicable in case ofreceipt of SHPI grant assistance from any other agency also. Banks seekinggrant assistance for revival of dormant SHGs have to submit declarationregarding receipt of SHPI grant assistance from NABARD/any other agencyfor the SHGs proposed to be revived, date of closure of SHPI project andother relevant details.

3. There is no other change in the terms and conditions bf the scheme as

contained in Circular No.25VmClD dated 29 November 2013.

4. The details of the revised incentive scheme along with application forms(annexure I to lV) enclosed.

Please acknowledge receipt of this circular.

Chief General Manager

Encl : As above.

gr$qqr<a>>qd qprsfldlTaking Rural India >> Fonrard

Yours faithfully

Annexure I

r$qqna>>qd qtusrtTaking Rural lndia >> Forward

Incentive Scheme for tracking and revival of dormant SHGs

L Why the scheme The phenomenal growth of SHG - Bank Linkage Programme (SHG-BLP) has

brought with it issues like inactive groups and dormancy in SHG functioning. Mostof the SHG formation activities have been supported under specific project withdefined project periods. Lack of support by promoting agencies / individuals afterthe project period has often led to dormancy and inactirieness in these SHGs

supported. While, there are no explicit data to indicate how many SHGs aredormant, sample studies have mapped the extent of dormancy in certain cases.Further, various stakeholders have also voiced the need to chalk out a suitableapproach to address the issue of revival of these dormant SHGs.

2 Indicators of SHG

leveldormancyThe factors suggestive of inactiveness are; irregular conduct of SHG levelmeetings, low attendance in meetings, irregular savings by members, non-operation of savings account with the bank, arrears in writing of the books ofaccounts, client drop outs, defaults by members in repayment of loans availedfrom groups' corpus/bank loans availed through the group etc.

3 Reasons for SHG

leveldormancyDormancy in SHG could be due to lack of affinity/homogeneity of membersforming the SHG, domination of the group by a few members leading to othermembers becoming inactive or disinclined, non-rotation of leadership, conflictamong members, lack of managerial capacity of members, non-receipt of loanrequested by members, non-availability of bank linkages and consequent lack ofmotivation to continue.

The real reason for these could be due to inadequate nurturing, hand holding bythe SHG promoting institution (SHPI), SHPI withdrawing from the area withoutalternate arrangement, closure of SHPI project before groups' sustainability,memberS dropping out of the group due to migration, marriage, ill health, deathetc.

4 Approach Approach to revival of dormant SHGs would be a bank-led initiative so as toensure continuance of banking support to dormant SHGs, after the revival.

For the purpose of coverage under the incentive scheme, revival of groupswhich are dormant with outstanding NPA loan of 06 months or more with thebanks only are considered.

Dormancy could be due to SHGs not following the "Panchasutras" with lrregularmeetings or no meetings, low attendance in the meetings, no regular savings by

the members, dormancy in bank operations, arrears in writing of the books ofaccounts, significant defaults by members in repayment of, loans availed fromgroups' corpus/bank loans availed through the group, or even embezzlement ofloans by group members/ leaders etc. For the purposes of quantification of theforegoing parameters of dormancy, the following is suggested:

(a) lrregular meetings - not even once in every month for the last 6 months, (b)

No meetings in the last 6 months or more (c) low attendance in the meetings -average attendance of members in group meetings less-than 25%, (d) no regularsavings - less than 25% of members saving regularly, (e) dormancy in savings

bank operations - no operation ( credit or debit other than crediting of periodicinterest or debiting of service charges) in S/B account of SHG in the last 6 months(f) arrears in writing of the books of accounts - more than 6 months.

5 Some essentialssteps in therevival plan ofdormant SHGs

Bank branches need to first track dormant SHGs in its books (savings /credit linked) and their area of operation.

Bank branches need to identify branch wise / village-wise number ofdormant SHGs ( indicating the key reason for dormancy)

Banks may identify the dormant SHGs in its books and engage theservices of either the SHPI which has promoted the SHGs, or other qualityNGOs that could serve as a Business facilitator, leaders of well-functioning SHGs or its own BC with adequate knowledge of the subjectfor revival of the dormant SHGs.

Besides revival of dormant SHGs in its own books, banks can also planfor revival of dormant SHGs in books of other banks. In which case,

bank would facilitate repayment of outstanding NPA loan account, bythe group with the earlier bank, revive the group, sanction and disbursefresh loan from the bank itself.

6 Revival Plan (listof activities to bedone bybanklBclBFl

NGO engaged bythe Bank)

The revival plan should interolio include among other things following activity.

i. identifying the key factors for dormancy,

ii. capacity building, convincing and hand holding of SHG members ofinactive / dormant groups.

iii. Depending on the reasons for dormancy, it should facilitate overcomethe key constraints which interalia could include, tracking the SHG/ itsmembers, conflict resolution, capacity building throughcounselling/training, facilitating group dynamics, ensuring bank linkageoperations, restoration/renewal of credit facilities after revival.

iv. regularising the loan account on clearance of NPA and renewal of creditfacilities etc.

v. Handholding the SHG and ensure that it follows "Punchsutras" for a

minimum period of one year after release of new loan by thebank/release of lst instalment of incentive.

Only few essentials requirements of the revival plan are illustrated above and thisis not a standardised format for revival.

n'r$qqna>>qd st?TsriTaking Rural India >> Forurard

7 Exclusions

(lneligible)

The following types of SHGs which slipped into dormancy owing to not followingthe basic tenets of SHGs or in geographies where specialised programmes are on-going aiming at universal coverage of SHGs, or SHG formation on a saturationmode may be excluded viz;

a) SHG formed without ensuring affinity amongst its members / SHG

formed with members not from the same neighbourhoodb) Revival of SHGs where more than 50 % of its members are not keen or

have joined other SHGs or dropped outc) Revival of SHGs in 150 WSHG districts and blocks where NRLM roll out is

complete.dl Districts where other agencies have taken up revival of dormant SHGs.

8 Eligibleinstitutions forseeking theincentive.

Commercial banks, RRBs, and DCCBs (PACs) would be eligible for NABARD's grantassistance / incentive for revival of dormant groups. Commercial banks maysubmit proposals to NABARD Regional Office through their controlling offices.RRBs and DCCBs (including PACs) may zubmit proposals to NABARD Regional

Office through their Head Office.

9 NABARD

incentive GrantAssistance forrevival.

NABARD would provide grant assistance for revival and credit linkage of dormantSHGs at the rate of Rs.3,000/= per SHG revived.

However, the bank should not have received grant assistance from NABARD orany other agency for promotion of SHGs identified as dormant & considered forrevival under the project in the last 3 years. The period of 3 years would be

reckoned from the date of closure of the previous project. The bank has tosubmit a declaration in this regard.

Grant assistance would be released on completion of benchmark activity based

on the recommendations of Project lmplementation & Monitoring Committee(PIMC) [specially constituted for the purpose consisting of theDDM/Representative of Regional office of NABARD, Bank branch representativeand LDM wherever neededl. The release pattern for the incentive will be in 2instalmerits as specified in the annexure ll. Application format and claim formsare specified in Annexure lll and lV.

NABARD would support training interventions and incentivisation of the agency /BC/BF/ individual as envisaged under the scheme. NABARD would makepayment of incentives to the bank as a back-ended incentive. The banks mayutilise the incentive available from NABARD for payment to the agency /individual contracted for the task.

10 Operationalperiod of thescheme

Sanctions/approvals for the proposals received upto 3L March 2015 will be

considered on a selective basis.

nr$vr qKfi >> qei mel sriTaking Rural India >> Fonvard

Annexure ll

Grant assistance for revival of SHGs which are dormant with outstanding NPA loan account of 5months or more with the bank

nr*qrn*<>>trd strrsriTaking Rural India >> Fonvard

Instalment

No

Bench mark activity to be completed Amount of grant

assistance

- Closure of existing NPA loan account by the group on fullrepayment & continue to be active for a minimum period of 3

months.

- Sanction and disbursement of new loan by the bank to the group

(on disbursement of CC loan / term loan) on removing thedormancy. Minimum loan amount of Rs.50000/- per SHG

1500=00

2 - One year after release of 1st instalment of grant support.

- towards Handholding support, provided the loan account is regular

and SHG following'Panchasutras'.

1,500=00

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Head Office: Plot No.24,'G' Block,Bandra Kurla Complex, Bandra (E), Mumbai.4oo 051

Teli+g1 22 26530084 . Fax: +91 22 2652 8141E-mail: mcid@nabard.org . Website: www.nabard.org

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Endt.no' NB.MCID/ / Promotional Grant Dormant SHG (Policyl / IOI -LS of date

Copy together with enclosures forwarded for information and necessary action to:

7. The Secretary to the Government of lndia, Ministry of Finance, Department of Financial Services,Banking Division, Jeevan Deep Building, Parliament Street, New Delhi 110 001.

2. The Secretary to the Government of India, Ministry of Finance, Department of Economic Affairs,Jeevan Deep Building, Parliament Street, New Delhi 110 001.

3. The Secretary to the Government of India, Ministry of Rural Development, Krishi Bhavan, NewDelhi 110 001.

4' The Director, National Rural Livelihood Mission (NRLM), Ministry of Rural Development,Government of India, 6th Floor, Hotel Samrat Kautilya Marg, Chanakyapuri, New Delhi- LLOO2L

5. The Secretary to the Government of lndia, Ministry of Agriculture, Krishi Bhavan, Dr. RajendraPrasad Road, New Delhi 110 001.

6. The Chief General Manager, R.P.C.D, RBl, Central Office, 1-0th Floor, Central Building, p.B No.10014, Mumbai - 400 001.

7. The Chairman, tndian Banks Association, Stadium House,6th Floor, Block 3, Veer Nariman Road,Mumbai - 400 020.

8. The Chief General Manager/General Manager/Officer-in-Charge, NABARD, Regional Office/SubOffice.

9. The chief General Manager, NABARD, All Ho Departments, Mumbai.

10. The Principal, College of Agricultural Banking, pune.

11. The Director, Bankers' Institute of Rural Development (society), Lucknow.

12. The olc, Bankers' Institute of Rural Deveropment, Mangalore/Bolpur.

13. The EA to Chairman, NABARD, HO, Mumbai

14. The EAs to DMDs, NABARD, HO, Mumbai.

f+ ==)(K Roy)

Asst. General Manager