SHG policy by TSCAB | TSCAB
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Loans, Savings

SHG policy by TSCAB


L & A Department


1. Preamble:

The schematic loaning programme under SHG allocated to DCCBs during the year 2016-17 expired by 31.3.2017 and the fresh allotments are given to the 3 DCCBs for the year 2017-18. The NABARD’s Refinance policy under Schematic Lending for the year 2017-18 is received.

2. Eligibility criteria for sanction of Limit:

a) License:

DCCBs without license are not eligible for refinance. As on date all the 9 DCCBs in the State have got RBI license.

b) Compliance with CRAR and Net NPA norms:

No refinance would be available to DCCBs having CRAR less than 7% as on 31.03.2016. For unrestricted refinance facility, the net NPA should not be more than 6% as on 31.03.2016. In case there is improvement/deterioration in any of the financial parameters as on 31.03.2017, the same will be reckoned for eligibility of refinance.

c) Compliance of Section 11(i) of BR Act 1949 by DCCBs:

No refinance would be available to Section 11(i) non-compliant DCCBs.

SCBs will be eligible for availing refinance in respect of section 11(i) non-compliant DCCBs provided the Bank has been exempted by GOI from complying with the requirements of said section of exemption application along with the Action Plan submitted by the Bank has been forwarded by NABARD to RBI for favorable consideration and the same is not pending with RBI/GOI for more than 1 year. Drawals would, however, be permitted for such Bank only upto the period of exemption.

d) The category-wise eligibility criteria are mentioned below:


Quantum of refinance

Low risk category (Marks 65 and above)

The quantum of refinance will be unrestricted, subject to the banks’ realistic lending program acceptable to NABARD and the overall allocation for the State/Bank.

Moderate risk category (Marks 50 to 64)

The quantum of refinance will be fixed at 25% over and above the refinance drawn in the previous year / 90% of the ground level credit for term loans disbursed by the concerned StCB / CCB during 2015-16, whichever is higher.

Medium risk category (Marks 40 to 49)

The quantum of refinance will be fixed at 10% over and above the refinance drawn in the previous year/80% of the ground level credit for term loans disbursed by the concerned StCB /CCB during 2015-16, whichever is more.

High risk category (Marks below 40)

Bank will not be eligible for refinance

e) Audit:

Audit of DCCBs for the year 2015-16 should have been completed and relative audit reports along with financial statements should have been received by TSCAB. The StCBs/CCBs with ‘A’ or ‘B’ classification for the year 2015-16 are only eligible. The DCCBs with audit classification ‘C’ and ‘D’ for the year 2015-16 will not be eligible for refinance.

Further the Audit of DCCB for the year 2016-17 should have been completed by 30.09.2017.

Sanction of allocation to DCCBs with Audit rating ‘C’ or ‘D’ can be considered, when such DCCBs improve their Audit rating to ‘A’ or ‘B’ for the year 2016-17.

In case there is any improvement in any of the parameters for the year 2016-17 as per audited figures, the same will be reckoned for eligibility of refinance to DCCBs.

3. Allocation to DCCBs.

In order to facilitate continuance of loaning under SHG for the year 2017-18, allotment is made to DCCBs on the following basis:

  1. The allocation under schematic lending under SHG for the year 2017-18 by TSCAB is worked out on the basis of last year’s disbursement, by taking into consideration the last 3 years average disbursements.

  1. The total eligibility of DCCBs under SHG is worked out to Rs.3600.00 lakhs.

  1. The DCCBs may work out the realistic lending programme for 2017-18 and in case of need may approach TSCAB for fresh/additional allocation, after exhausting the allocation already made duly submitting the application in the prescribed format supported by the Board Resolution and specific request.

  1. DCCBs with Audit classification ‘C’ and ‘D’ for the year 2015-16 will not be eligible for refinance from NABARD. In case there is improvement in any of the financial parameters/audit classification as on 31st March,2017, same will be reckoned for eligibility for refinance from NABARD. Till such time critical support will be provided by TSCAB from out of own funds.

4. Activities for financing – Thrust areas:

The thrust areas for which preference will be given for release of refinance during 2017-18 includes among others, SHGs/JLGs/RMGs, poly house/green house, agri-clinics and agribusiness centres, rural housing, agro-processing, etc.

As per the guidelines of RBI, micro credit may cover not only consumption and production, but also other credit needs of SHG members.

Criteria for selection of the groups:

The DCCBs should adopt the following criteria for selection of SHG groups for financing.

i) The group should have been in active existence for at least a period of six (6) months.

ii) The groups should have successfully undertaken savings and credit operations from its resources.

iii) Democratic working of the group wherein all members feel that “they have a say” should be evident.

iv) The group is maintaining proper accounts/records.

v) The SHG members should preferably have homogeneous background and interest.

vi) Marks awarded on Critical Rating Index(CRI) method.

5. Estimation of credit requirement of SHGs.

As per the revised guidelines of SLBC the estimation of credit requirement for each group should be worked out by adopting the following criteria:

1st Dose: 4 times of the corpus or Rs. 50,000/- whichever is high.

2nd Dose: 10 times of corpus or Rs.1,00,000/- in case of rural and Rs.1,50,000/- in case of urban areas whichever is high.

3rd and Subsequent Doses: Financing as per Micro credit plan.

NABARD had vide circular Ref.No. NB. MCID/153/SHG-1(Policy) 2013-14, dt:27.5.13 suggested, simpler norms to be carried out by the financing banks at two stages/levels.

1. At the time of first credit linkage of SHGs and

2. For mature SHGs where higher quantum of credit is requested (i.e., credit in excess of four times of the group corpus could be considered).

The norms indicated in Annexure-I & II of the NABARD circular cited above are illustrative in nature. The financing bank may either use or develop suitable norms with necessary amendments for use by the financing units.

6. Credit Rating of SHG Groups (CRI):

The DCCBs should rate the SHGs proposed to be financed as per the rating system prescribed by NABARD under “Critical Rating Index (CRI)” – The following points should be covered under CRI for rating the SHG groups:

    1. Composition of Group.

    2. Age of Groups

    3. No. of meetings per month

    4. Attendance of meetings by members

    5. Maintenance of minutes book

    6. Participation of members in discussions.

    7. Savings frequency, mode of recovery, books of accounts, byelaws/group rules.

As per the above credit rating, the banks should award the marks for each parameter out of maximum 20 marks. The group receiving more than 12 marks and above is to be considered for refinance (Please refer to TSCAB’ circular No. Ref: L&A/IF/7/SHG/2016-17 dt.04.05.2016 and also NABARD’s guidelines on Critical Rating Index circular Ref.No.NB.MCID/153/SHG-1(Policy)/2013-14 dt.27.05.2013.)

7. Security:

  1. No collateral security upto an aggregate limit of Rs.5.00 lakhs per group.

  2. If aggregate credit limit exceeds Rs.5.00 lakhs, SHG should offer collateral security.

8. Verification and maintenance of books:

    1. If the loans to SHGs are advanced by PACS, concerned DCCB should ensure timely audit of the PACS, proper documentation and passing on recoveries etc.

    2. The DCCBs may sanction loans to SHGs for purposes as prescribed by NABARD/RBI/SLBC from time to time and ensure pre and post verification of at least 25% of the sanctioned loans to groups in all aspects.

    3. The DCCBs should ensure proper maintenance of the books of accounts and records as prescribed by DRDA, NABARD, SLBC from time to time.

    4. The DCCBs should ensure proper maintenance of books maintained by SHGs financed for enabling to have access to the officials of TSCAB/ NABARD at the time of inspection/review monitoring/ verification.

9. Extent of refinance:

100% refinance will be provided for all thrust areas as indicated at S.No. 4 above, either from NABARD or TSCAB for all DCCBs, subject to fulfillment of other requirements prescribed from time to time. Even though the operations at ground level may be in the form of CC A/c, the refinance from TSCAB will be by way of term loans only.

10. Repayment period:

i) The repayment period is normally fixed for three years by TSCAB to DCCBs which is similar to that of NABARD with six half yearly installments and Interest chargeable on the outstanding amount on 31st March and 30th Sept. each year.

Any advance repayment i.e., prior to the prescribed due date will attract prepayment charges @ 2.50% p.a. for residual period, other conditions remain unchanged. Accounts operation at ground level shall be in the form of cash credit a/c as per the Govt. policy informed by NABARD, vide circular letter dt:20.12.11 or as may be modified from time to time.

ii) As regards re-payments by SHG Groups to DCCBs, the banks may follow the existing monthly recovery as per the practice in vogue for old loans.

11. Preferring claims/drawals from TSCAB:

  1. After disbursing loans to groups, the DCCBs should prefer drawals with the following documents within a period of two months.

b) Further, drawal application should comply with the following:

  1. DP Note for the total amount of claim/drawal.

  2. Time promissory notes (for 6 installments)

  3. Schedule of repayment of the present drawal/claim.

  4. Latest Unit-wise quarterly DCB (demand, collection & balance)

  5. Certificate by the CEO/GM of the DCCB stating that the norms prescribed by NABARD are adhered to.

  6. SHG-wise, date-wise, branch-wise disbursements of loans with reference to rate of interest charged. In the statement of SHG drawal, please include a column indicating the marks awarded to each SHG as per ‘Critical Rate Index’. (Ref: TSCAB circular No. L&A/IF/7/SHG/2016-17 dt: 04.05.2016 & NABARD circular dated 27.05.2013, Annexure-I)

  7. DCCBs should furnish NOC/No overdues Certificate.

  8. DCCB should certify that all the loan documents executed by SHGs are under the custody of concerned Branch Manager.

c) The minimum recovery percentage is fixed as 90% for securing refinance from TSCAB.

12. Rate of interest:

The rates of interest charged at various levels with effect from 01.11.2016 are as follows:





Rates of interest/margin*

Interest rate (p.a)











PACS to ultimate borrowers




* The interest rates are subject to change based on revision by NABARD from time to time.

* Penal interest on the overdues will be charged @ 2% over and above the interest rate at which refinance was disbursed, as in the case of schematic lendings/ investment credit.

13. Others:

  1. The DCCBs should furnish the monthly returns/progress reports before 5th of every succeeding month in the prescribed format already communicated and ensure submission of quarterly DCB position/recovery (March, June, September and December).

  1. If there are any overdues from DCCB, the drawal application cannot be entertained and as such, the DCCB should ensure liquidation of all overdues if any before sending the drawal application.

  1. The group dynamics and peer pressure play a vital role in the recovery aspect from groups in Micro finance and as such DCCBs should take all necessary steps for maintaining minimum recovery percentage of 90% from all the SHGs financed.

14. General:

  1. SHG groups shall comply with KYC norms as communicated earlier by APCOB vide its circular dt.19.7.2011.

  1. SHGs shall be sanctioned cash credit limits in place of term loans as communicated earlier by Bank vide its letter dt.27.12.2011 except in such cases as per the clarification given by NABARD vide their letter reference No. NB. APRO. MCID/1571/SHG-1(Policy)/2012-13, dt.2.5.2012.