The Reserve Bank of India (RBI) has informed public, private and small finance banks regarding the enhancement of collateral free loans for SHGs through a letter.
No collateral to be now required for loans between Rs. 10 lakh and Rs. 20 lakh to Self Help Groups (SHGs). Amendments to Credit Guarantee Fund for Micro Units (CGFMU) Scheme notified. Reserve Bank of India (@RBI) Master Circular modified.@PMO @FinMinIndia #SHG pic.twitter.com/w0vkg6IQRL
— DFS (@DFS_India) August 19, 2021
The Department of Financial Services gave this notification through its official Twitter handle. The Department of Financial Services said in a tweet, “No collateral is now required for loans between Rs 10 lakh and Rs 20 lakh to Self Help Groups (SHGs). Amendment to the Credit Guarantee Fund for Micro Units (CGFMU) Scheme has been notified.Also Read: Jio Recharge: Get calls and internet in less than Rs 100 recharge, know all the benefits
This decision of the government is an amendment to the master circular dated April 1, 2021. No collateral should be taken from SHGs for loans between Rs 10 lakh to Rs 20 lakh and there should be no lien against the savings bank account of the SHG. However, the entire loan (irrespective of the outstanding loan, even if the latter is less than Rs 10 lakh) will be eligible for coverage under Credit Fund for Micro Units (CGFMU).
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