Enhancement of collateral free loans to Self Help Groups (SHGs) under DAY-NRLM from Rs. 10 lakh to Rs. 20 Lakh

Last updated: 11 August 2021

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The Reserve Bank of India has announced an enhancement to the collateral-free loan limit for Self Help Groups (SHGs) participating in the Deendayal Antyodaya Yojana - National Rural Livelihoods Mission (DAY-NRLM). Previously set at £10 lakh, the limit for collateral-free loans has now been increased to £20 lakh. This change, effective from July 1, 2021, ensures that SHGs can access larger amounts of funding without needing to provide collateral, with loans up to £20 lakh eligible for coverage under the Credit Guarantee Fund for Micro Units (CGFMU).

RBI/2021-22/83 FIDD.GSSD.CO.BC.No.09/09.01.003/2021-22 August 9, 2021 The Chairman/ Managing Director/Chief Executive Officer Public Sector Banks Private Sector Banks (including Small Finance Banks) Madam/Dear Sir, Enhancement of collateral free loans to Self Help Groups (SHGs) under DAY-NRLM from ₹10 lakh to ₹20 Lakh Please refer to theMaster Circular FIDD.GSSD.CO.BC.No.04/09.01.01/2021-22 dated April 1, 2021, on Deendayal Antyodaya Yojana - National Rural Livelihoods Mission

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FAQ :

The collateral-free loan limit for SHGs under DAY-NRLM has been increased from £10 lakh to £20 lakh.

The change was notified by the Government of India on July 1, 2021.

Yes, loans to SHGs above £10 lakh and up to £20 lakh are now eligible for collateral-free status.

The CGFMU is a scheme that provides coverage for loans, ensuring that the entire loan amount, even if it drops below £10 lakh, is eligible for coverage.

No collateral or margin will be charged for loans to SHGs up to £20 lakh.

No lien should be marked against the savings bank account of SHGs, and no deposits should be insisted upon when sanctioning these loans.

Notification No : RBI/2021-22/83 FIDD.GSSD.CO.BC.No.09/09.01.003/2021-22
Source : https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12143&Mode=0

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