National Rural Livelihood Mission
- The Ministry of Rural Development, Government of India launched the National Rural Livelihood Mission (NRLM) by restructuring Swarnajayanti Gram Swarojgar Yojana (SGSY) with effect from 01st April 2013.
- NRLM was renamed as DAY-NRLM (Deendayal Antyodaya Yojana – National Rural Livelihoods Mission) w.e.f. March 29, 2016.
- The DAY-NRLM is the flagship program of Govt. of India aims for poverty reduction through building strong institutions of the poor, particularly women, and enabling these institutions to access a range of financial services and livelihoods.
- DAY-NRLM adopts a demand driven approach, enabling the States to formulate their own State specific poverty reduction action plans.
Women SHGs and their Federations
- Women SHGs under DAY-NRLM consist of 10-20 persons. In case of special SHGs i.e. groups in the difficult areas, groups with disabled persons, and groups formed in remote tribal areas, this number may be a minimum of 5 persons.
- Only for groups to be formed with Persons with disabilities, and other special categories like elder, transgender, DAY-NRLM will have both men and women in the Self-help Groups.
- DAY-NRLM promotes affinity-based women Self Help Groups (SHGs).
- SHG is an informal group and registration under any Societies Act, State cooperative Act or a partnership firm is not mandatory. However, Federations of Self Help Groups formed at Village, Gram Panchayat, Cluster or higher level may be registered under appropriate acts prevailing in their respective states.
Financial Assistance to the SHGs
Revolving Fund (RF): Earlier DAY-NRLM provided RF of Rs.20,000 to Rs.30,000 per SHG to SHGs in existence for a minimum period of 3/6 months and follow the norms of good SHGs, known as ‘Panchasutra’ – regular meetings, regular savings, regular internal lending, regular recoveries and maintenance of proper books of accounts.
The purpose of RF is to strengthen their institutional and financial management capacity and build a good credit history within the group.
Community Investment Support Fund (CIF): CIF would be provided to the SHGs promoted under DAY – NRLM in all blocks and would be routed through the Village level/Cluster level Federations, to be maintained in perpetuity by the Federations. The CIF would be used by the Federations to advance loans to the SHGs and/or to undertake the common/collective socio-economic activities.
DAY-NRLM covers it as difference between the Lending Rate of the banks and 7% on all credit from the banks/ financial institutions availed by women SHGs for a maximum of Rs.3 lakhs- per SHG. For example, if lending rate is 12.5% then difference of 5.5% would be covered under interest subvention. This would be available across the country in two ways:
(i) In 250 identified districts, banks may lend to the women SHGs @7% up to an aggregated loan amount of Rs.3 lakhs. The banks would be subvented to the extent of difference between the Weighted Average Interest Charged and 7%, subject to the maximum limit of 5.5%. An additional interest subvention of 3% is also available on prompt repayment by the SHGs, reducing the effective rate of interest to 4%.
(ii) In the remaining districts, all women SHGs under DAY– NRLM would be eligible for interest subvention on prompt repayment. The difference between the bank lending rates and 7% for loans up to Rs.3 lakhs subject to a maximum limit of 5.5% would be subvented directly in the loan accounts of the SHGs by the SRLMs. This part of the scheme would be operationalized by the SRLMs.
Role of Banks
- Opening of Savings account of SHGs: Banks may not insist on Permanent Account Number (PAN) of SHGs at the time of opening of account or transactions and may accept declaration in Form No 60 as may be required. Opening of savings account of all members with the bank shall not be made a prerequisite for credit linkage of SHGs. Banks would maintain separate Savings and loan account for Self Help Groups.
- Opening of Savings account of Federation of SHGs: Banks would open savings account of Federations of SHGs at village, Gram Panchayat, Cluster or higher level. These accounts may be categorized as savings account for ‘Association of persons’.
- Opening of Current Account of Producer Groups (PGs): In order to facilitate collective production and marketing for their produce, banks are advised to open current account for Producer Groups promoted under DAY-NRLM at village, Gram Panchayat, Cluster or higher level.
- Transaction in Savings/Cash Credit account of SHGs and Federation of SHGs: SHGs and their federations may be encouraged to transact through their respective saving accounts and Cash Credit Loan accounts on regular basis.
Eligibility criteria for the SHGs to avail loans:
- SHGs should be in active existence at least since the last 6 months as per the books of account of SHGs and not from the date of opening of S/B account.
- SHGs should be practicing ‘Panchasutras’e. Regular meetings; Regular savings; Regular inter-loaning; Timely repayment; and Up-to-date books of accounts;
- Qualified as per grading norms fixed by NABARD.
- The existing defunct SHGs are also eligible for credit if they are revived and continue to be active for a minimum period of 3 months.
Loan amount: SHGs may avail either Term Loan (TL) or a Cash Credit Limit (CCL) loan or both based on the need.
Cash Credit Limit (CCL): Minimum loan of Rs.6 lakh to each eligible SHGs for a period of 3 years with a yearly drawing power (DP). The drawing power may be enhanced annually based on the repayment performance of the SHG. The drawing power is calculated as follows:
- DP for First Year: 6 times of the existing corpus or minimum of rs.1 lakh, whichever is higher,
- DP for Second Year: 8 times of the corpus at the time of review/ enhancement or minimum of Rs.2 lakh, whichever is higher,
- DP for Third Year: Minimum of Rs.6 lakh based on the Micro credit plan prepared by SHG and appraised by the Federations /Support agency and the previous credit history.
- DP for Fourth Year onwards: Above 6 lakh, based on the Micro credit plan prepared by SHG and appraised by the Federations /Support agency and the previous credit History.
Term Loan: In case of Term Loan, banks may sanction loan amount in doses as mentioned below:
- First Dose: 6 times of the existing corpus or minimum of 1 lakh, whichever is higher
- Second Dose: 8 times of the existing corpus or minimum of Rs.2 lakh, whichever is higher
- Third Dose: Minimum of 6 lakh, based on the Micro credit plan prepared by the SHGs and appraised by the Federations /Support agency and the previous credit history.
- Fourth Dose onwards: Above 6 lakh, based on the Micro credit plan prepared by the SHGs and appraised by the Federations /Support agency and the previous credit History.
Purpose of loan and Repayment:
The loan amount would be distributed among members based on the Micro Credit Plan (MCP) prepared by the SHGs. Micro Credit Plan (MCP) prepared by SHGs would form the basis for determining the purpose and usage of loans.
Repayment schedule for Term Loans:
- The First dose of loan may be repaid in 24-36 months in monthly/Quarterly Instalments.
- The Second dose of loan may be repaid in 36-48 months in monthly/Quarterly instalments.
- The Third dose of loan may be repaid in 48-60 months based on the cash flow in monthly/Quarterly instalments.
- The loan from Fourth dose onwards may be repaid between 60-84 months based on the cash flow in monthly/ quarterly installments.
Security and Margin: No collateral and no margin would be charged up to Rs.10.00 lakh limit to the SHGs. No lien should be marked against savings bank account of SHGs and no deposits should be insisted upon while sanctioning loans.
Key Features of DAY-NRLM
- Universal Social Mobilization.
- Participatory Identification of poor.
- Promotion of strong Institutions of the poor such as SHGs.
- Strengthening all existing SHGs and federations of the poor.
- Emphasis on Training, Capacity building and skill building.
- Revolving Fund and Community investment support Fund.
- Universal Financial Inclusion as DAY-NRLM would work on both demand and supply side of Financial Inclusion.
- Provision of Interest Subvention.
- Funding Pattern: DAY-NRLM is a Centrally Sponsored Scheme and the financing of the programme would be shared between the Centre and the States in the ratio of 60:40 (90:10 in case of North Eastern States including Sikkim; completely from the Centre in case of UTs).
- Phased Implementation: Building up social capital takes some time in the initial years, but it multiplies rapidly after some time. DAY-NRLM would reach all districts by the end of 12th Five-year Plan.
- Intensive blocks: The blocks that are taken up for implementation of DAY-NRLM, ‘intensive blocks’, would have access to a full complement of trained professional staff and cover a whole range of activities of universal and intense social and financial inclusion, livelihoods, partnerships etc.
- Rural Self Employment Training Institutes (RSETIs): The need-based training builds entrepreneurship qualities, improves self-confidence, reduces risk of failure and develops the trainees into change agents. DAY-NRLM would encourage public sector banks to set up RSETIs in all districts of the country for transforming unemployed youth into confident self- employed entrepreneurs through a short duration experiential learning programme followed by systematic long duration hand holding support.
Frequently Asked Questions (FAQ)
Is there any Capital Subsidy under DAY-NRLM?
Capital Subsidy has been discontinued under DAY-NRLM.
What is DAY-NRLM?
DAY-NRLM is the flagship program of Govt. of India aims for poverty reduction through building strong institutions of the poor, particularly women, and enabling these institutions to access a range of financial services and livelihoods.
What are Panchsutras?
These are: regular meetings, regular savings, regular internal lending, regular recoveries and maintenance of proper books of accounts.
Women SHGs under DAY-NRLM consist of how many persons?
10-20 persons (Except special group).