Self Help Groups

SHG | Micro Credit | Micro Savings | Business Correspondents

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Self Help Groups

Over the last few years, microfinance in India has evolved into various operating forms and to varying degree of success. One such form of microfinance is the Self Help Group (SHG) movement. Based on the concept of “self-help”, women organize themselves into groups of ten to twenty and operate a “savings first-credit later”model whereby member's savings are used to extend loans to the members. The rise of this lending model and formal SHG Federation, coupled with SHG Bank Linkage Programme, have made this a dominant form of microfinance. ICICI Bank has been active in the space of SHG lending for the past eight years. With its increased outreach in rural and semi urban areas, the Bank has plans to scale up lending under this model.

Target Customer Base :The product is targeted towards microfinance borrowers organized in SHGs which transacts with banks. These SHGs comprise primarily of women in rural and semi-urban locations who form a group by themselves or are organized by SHPIs. The group appoints office-bearers from amongst the members to operate their account with a bank's branch in their vicinity.

Eligibility : The targeted SHGs should have a savings account with the Bank and display credit discipline and transparency in book keeping. In case they do not have a savings account,they shall be required to open a savings account with the Bank before they can be sanctioned credit limits. Besides, the SHG should meet other eligibility norms of the Bank required for availing credit.

Maximum Limit : Rs. 350,000 per SHG

Security : Loans to SHGs shall be unsecured in nature.

Maximum Rate of Interest : I-Base + 10%

Maximum Processing Fee : A non-refundable processing fee up to 2% (plus applicable service taxes) on the loan sanctioned by ICICI Bank shall be payable by the customer. No processing fees shall be collected for the loans up to Rs. 25,000.

Penal Rate of Interest : Applicable Rate + 6%

Other Charges : Other charges including but not limited to statutory charges, such as stamp duty on documentation etc., as applicable, are payable on actual basis and any other charges as communicated to the borrower from time to time by ICICI Bank.

All in cost charges : All the above charges (mentioned here in above) comprise "All - in - cost"; for availing the facility / loan.

Tenure : Up to 3 years

End Use of Loans : Credit assistance provided to SHGs for meeting following credit requirements of SHG members -

Income generation activities

Social needs

Debt swapping

Documentation :

Following documents are required to be obtained/verified from SHG before extending credit limit:
Pre-Sanction :

Duly filled Preliminary Application Form

Constitution documents
- Recommendation letter/Sanction letter/ Loan Recommendation letter from Block Development Officer (BDO) or a Class I Gazetted officer working in the same department; or
- Inter-se Agreement (either registered or unregistered) executed by all members of SHGs communicating their decision to open a Savings Account with the bank and identifying two or three members to jointly operate the account

Identity Proof of the SHG
- Recommendation letter/Sanction letter/ Loan Recommendation letter from Block Development Officer (BDO) or a Class I Gazetted officer working in the same department; or
- SHG Registration certificate (if registered); or
- Copy of passbook of existing account with a public sector bank; or
- Original letter of introduction from a bank official of a public sector bank; or
- Copy of passbook of an existing account with a Regional Rural Bank along with a letter of introduction from the Village Sarpanch/ Village Administrative Office (VAO)

Address Proof of the SHG
- Same as Constitution Documents; or
- Same as Identity Documents if it contains the address.

Photographs of Authorized Signatories

Identity Proofs of Authorized Signatories

Address Proofs of Authorized Signatories

Details of all members of SHG (names, addresses, dates of birth) duly signed and stamped by Authorized Signatories

Minutes of the meeting

Attendance Register

Book of Accounts

Pre-Disbursement :

Duly filled final Facility Application Form

Inter Se Agreement executed by all members of SHGs

Loan Authorisation Letter