RBI/2009-10/ 127 —RPCD.SP.BC.No 12 /09.01.01/2009- 10 August 24, 2009
The Chairman /Managing Directors, All Indian Public Sector Banks(Excluding RRBs)
Increase in exemption of collateral security in respect of individual and group loans under Swarnjayanti Gram Swarozgar Yojana (SGSY) Scheme
Please refer to our Circulars No.RPCD.SP.BC23/ 09.01.01/ 99 -2000 dated September 1, 1999 and RPCD.SP.BC.113/ 09.01.01/ 2002-03 dated July 4, 2002 advising the banks about the exemption of secondary collateral security ( earlier referred to as primary security ) for individual loans upto Rs 50,000/- and group loans up to Rs. 5 lakh under SGSY Scheme respectively.
It has now been decided to raise the exemption limit of secondary collateral security under SGSY to Rs. 1 lakh from the existing Rs.. 50,000/- in respect of individual loans and to Rs.10 lakh from the existing Rs.5 lakh in respect of group loans. Accordingly, for individual loans up to Rs.1 lakh and group loans up to Rs. 10 lakh, the assets created out of bank loan would be hypothecated to the bank as primary collateral (earlier referred to as primary security). In case where movable assets are not created as in land based activities such as dug well, minor irrigation, etc., mortgage of land may be obtained. Where mortgage of land is not possible, third party guarantee may be obtained at the discretion of the bank.
For all individual loans exceeding Rs.1lakh and group loans exceeding Rs. 10 lakh, in addition to primary security such as hypothecation/ mortgage of land or third party guarantee as the case may be, suitable margin money/ other collateral security in the form of insurance policy; marketable security/ deeds of other property etc. may be obtained at the discretion of the bank. The upper ceiling of Rs.10 lakh in respect of group loans is irrespective of the size of the group or prorata per capita loan to the group.
We advise that we are receiving complaints both from Government of India and certain State Governments that banks are not complying with even the existing norms of exempting individual loans up to Rs.50, 000 and for group loans up to Rs. 5 lakh from taking any secondary collateral.. You may kindly consider issuing necessary instructions to your controlling offices/branches to ensure strict compliance with the guidelines.
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We are providing below a Little Note on what Swarnjayanti Gram Swarozgar Yojana (SGSY) Scheme:-
Swarnjayanti Gram Swarozgar Yojana Guidelines
(As per Reserve Bank of India Guidelines)
The Ministry of Rural Development, Government of India has launched a new programme known as “Swarnjayanti Gram Swarozgar Yojana” (SGSY) by restructuring the existing schemes namely:
· Integrated Rural Development Programme (IRDP)
· Training of Rural Youth for Self Employment (TRYSEM)
· Development of Women & Children in Rural Areas (DWCRA)
· Supply of Improved Toolkits to Rural Artisans (SITRA)
· Ganga Kalyan Yojana (GKY)
· Million Wells Scheme (MWS)
The SGSY Scheme is operative from 1st April 1999 in rural areas of the country. SGSY is holistic Scheme covering all aspects of self-employment such as organization of the poor into Self Help Groups, training, credit, technology, infrastructure and marketing. The scheme will be funded by the financial institutions, Panchayat Raj Institutions, District Rural Development Agencies (DRDAs), Non Government Organisation (NGOs), Technical institutions in the district; will be involved in the process of planning, implementation and monitoring of the scheme. NGO’s help may be sought in the formation and nurturing of the Self Help Groups (SHGs) as well as in the monitoring of the progress of the Swarozgaris. Where feasible their services may be utilized in the provision of technology support, quality control of the products and as recovery monitors cum facilitators.
The scheme aims at establishing a large number of micro enterprises in the rural areas. The list of Below Poverty Line (BPL) households identified through BPL census duly approved by Gram Sabha will form the basis for identification of families for assistance under SGSY. The objective of SGSY is to bring assisted family above the poverty line within three years by providing them income generating assets through a mix of bank credit and Government subsidy. The rural poor such as those with land, landless labour, educated unemployed, rural artisans and disable are covered under the scheme.
The assisted families known as Swarozgaris can be either individuals or groups and would be selected from BPL families by a three member team consisting of Block Development Officer¸ Banker and Sarpanch.
SGSY will focus on vulnerable section of the rural poor. Accordingly the SC/ST will account for at least 50%, Women 40% and the disabled 3% of those assisted.