Financing of Joint Liability Groups (JLGs) of Micro entrepreneurs /artisans

in Non Farm sector

1. The Scope of Activities

Within RNFS, a variety of traditional activities in handlooms, wood, metal,
fibre, handicrafts, carpets, leather-works, etc., which are highly labour-intensive
and have a niche market including exports provide good opportunities to micro-
entrepreneurs. These potential micro enterprises could be pursued by forming
JLGs.
2. Promotional support from NABARD
Under the scheme, NABARD would provide some incentives, to banks by
way of promotional grants for forming, nurturing and financing JLGs, on an
annual basis, for the first three years. NABARD would also extend need-based
promotional support for training, exposure visits, experience-sharing, etc for
banks’ staff and other publicity and awareness-building measures.
3. Awareness – Building & Monitoring
It is suggested that the JLG concept and operational guidelines may be
widely disseminated among branch managers and other field level staff so that
they are adequately sensitised and encouraged to prepare perspective plans for
JLG formation and their financing in the respective areas of operation. Rural
branches may also explore the formation of non farm activity specific JLGs,
which will facilitate pooling of demand for raw materials for non farm enterprises
and other inputs as well as provide an opportunity for negotiating for better
prices. The implementation of the scheme may be periodically reviewed in
forums like Branch Managers’ meetings, etc.
4. Simplified Process & Forward & Backward linkages
JLG financing in Non farm Sector is a good business proposition in view of
the simplified documentation, group dynamics, good repayment culture and
prospects of credit enhancement to quality clients. Continued and hassle-free
access to credit coupled with support from the State Government and other
extension and promotional agencies in terms of forward and backward linkages
will facilitate graduation of JLGs to other micro-enterprises within the sector and
ensure gainful employment and livelihood opportunities.
 (No. NB.MCID/ 1063 /Innov.JLG/2009-10 dated 03 December 2009.Circular No.203 /MCID - 10
/2009))

Section 19 of the Banking Regulation Act 1949 (AACS) -Restriction on

holding of shares

In pursuance of the powers conferred by Section 19 read with Section 56

of the said Act, the Reserve Bank has specified the extent and conditions subject
to which cooperative banks may hold shares in any other cooperative society.

As per the extant instructions of the RBI, a cooperative bank should offer
to make its contribution to the shares of a cooperative society only if the By-laws
of the recipient society provide for the retirement of share capital contributed by
it. The retirement of the share capital contributed by a bank to the shares of any
society should be completed in 10 equal annual installments commencing from
the cooperative year immediately following the year in which the concern
commences business or production. Further, a cooperative bank should not,
except with the permission of the Reserve Bank, contribute to the share capital of
a society if it is situated outside its area of operation. As regards investment in
the shares of IFFCO / KRIBHCO, banks may follow the instructions issued by the
RBI.

The above restrictions will not apply to holdings by cooperative banks of

shares in non-profit making cooperative societies such as those formed for the
protection of mutual interests (e.g. Cooperative Banks’ Association) or for the
promotion of cooperative education, etc. (e.g. State Cooperative Union), or
housing cooperatives for the purpose of acquiring premises on ownership basis,
etc.
(Ref. No.NB.DoS.HO.POL. 4095 /J-1/2009-10 dated 09 December, 2009.Circular No. 207 /DoS.
42 /2009)

Centrally Sponsored Scheme - Establishment/ Modernisation of Rural

Slaughter Houses

It has been decided by Government of India to launch a subsidy based

credit linked scheme for establishment/modernisation of Rural Slaughter Houses
on pilot basis during the remaining period of XI Five Year Plan with effect from
2009-10 in three States, viz., Andhra Pradesh, Meghalaya and Uttar Pradesh.
The credit linked back-ended subsidy shall be provided on the total financial
outlay for the sub-sectors. The assistance under the scheme shall be available to
any company, partnership firm, NGO and individual entrepreneurs. Capital
subsidy @ 50% of the total financial outlay of the project with the upper ceiling
shall be available for all categories of the promoters.

The Department of Animal Husbandry, Dairying and Fisheries, Ministry of

Agriculture, Government of India, is the focal department for the scheme.
NABARD will be administering the subsidy and monitoring the progress of the
scheme besides providing refinance support to the eligible financing banks for
the term loan extended under the scheme. Extent and interest rate of refinance
will be as per instructions issued by NABARD from time to time.

The implementation of the scheme shall be monitored by the Central

Monitoring Committee (CMC) on a half yearly basis and the State Level
Sanctioning and Monitoring Committee (SLSMC) will review the progress on
quarterly basis. The participating banks will conduct periodic inspections of the
units and give a feedback to the SLSMC on a consolidated basis.
(Ref.No.NB.ICD.GSS/ 1583 /RSH-4/2009-10 dated 24 December 2009.Circular No. 217 /ICD -
44/2009)

Centrally Sponsored Scheme for Establishing “ Estates” and Mother Units

For Rural Backyard Poultry

It has been decided by Government of India to launch a Centrally sponsored

scheme for poultry development with a total outlay of Rs.150 crore during the XI
FYP out of which Rs.28 crore is allocated for the year 2009-10. The scheme has
following three components namely, (i) Assistance to State Poultry Farms, (ii)
Rural Backyard Poultry and (iii) Poultry Estates.

i. Assistance to State Poultry Farms : Under this component 100% financial

assistance would be provided for strengthening the existing State Poultry
Farms. This assistance would be 100% centrally funded for North Eastern
States and for other States, the expenditure would be shared between
Centre and State on 80:20 basis.

ii. Rural Backyard Poultry Development : Under this component, mother

units with a unit size of 1500 chicks would be established for rearing one
day old chicks of low input birds upto 4 weeks, after which the birds would
be supplied to beneficiary families. The mother units will get the day old
chicks from State Poultry Farms or private hatcheries producing low input
birds. The mother units will be eligible for a subsidy amount of Rs.0.20
lakh per unit which would be directly routed by the State Department of
Animal Husbandry to the financing bank. The mother units will also be
eligible for Interest Free loan of Rs.0.36 lakh per unit which will be routed
through the financing banks by NABARD.

iii. Poultry Estates : This component will be implemented on pilot basis and
only two poultry estates in low commercial activity States/region like Bihar,
Chhattisgarh, Jharkhand, Gujarat, Madhya Pradesh, Orissa, Uttarakhand,
some districts of Uttar Pradesh and West Bengal, Vidarbha Region of
Maharashtra and North Eastern States are expected to be established at
this stage. While grant for infrastructure development will be provided to
States in the ratio of 75:25 (Center to State], for other components 100%
grant assistance will be provided through NABARD. The scheme
envisages establishment of a maximum of 100 broiler or layer units of
 2000 birds each, per poultry estate, which will be eligible for Interest Free
Loan @ 50% of total financial outlay (TFO) of the project. Feed
manufacturing units that are set up in poultry estates will also be eligible
for Interest free loan @ 50% of the outlay.

The Department of Animal Husbandry, Dairying and Fisheries, Ministry of

Agriculture, Government of India, is the focal department for operating the
scheme. NABARD will be administering the Interest Free Loan and monitoring
the progress of the scheme besides providing refinance support to the eligible
financing institutions for the term loan extended under the scheme. The extent
and interest rate on refinance will be as per instructions issued by NABARD from
time to time. The implementation of the scheme shall be monitored by the
Central Level Joint Monitoring Committee on a half yearly basis at National level.
The State Level Sanctioning and Monitoring Committee (SLSMC) will sanction
Interest Free Loan for the projects and review the progress on a quarterly basis
at the State level.
(Ref.No.NB.ICD. GSS/1584 /Poultry estates-4/2009-10 dated 24 December 2009.Circular No.
218 /ICD- 45 /2009)

Centrally Sponsored Scheme - Integrated Development of Small Ruminants

and Rabbits

1. It has been decided by Government of India to launch a centrally

sponsored scheme for integrated development of small ruminants and rabbits for
providing Venture Capital assistance during the remaining period of XI Five Year
Plan in 24 states with a focus on 114 districts for small ruminants and 12 districts
for rabbits. Under the scheme an Interest Free Loan (IFL) shall be provided
based on the total financial outlay (TFO) for the various components.

2. The assistance under the scheme shall be available to landless labourers,

marginal farmers and their SHGs for setting-up rearing units with preference to
traditional shepherds, women and SC/STs. For breeding farms Individual
farmers, traditional breeders, entrepreuners, NGO, etc, would be eligible with
preference to those who have organised the farmers into groups for taking up
rearing of small ruminants and rabbits. The IFL @ 50% of the TFO of the project
with the upper ceiling shall be available for all categories of the promoters.

3. Assistance under the scheme would be purely credit linked and subject to
sanction of the project by eligible institutions. Banks shall, after sanction of loans,
apply through their Controlling Offices to Regional Office (RO) of NABARD for
sanction of Interest Free Loan. NABARD RO will scrutinise the claim proposal
and ensure that those, which satisfy the terms and conditions are put up to State
Level Sanctioning and Monitoring Committee (SLSMC) for sanction. The SLSMC
will sanction the Interest Free Loan for projects to eligible institutions. NABARD
would provide refinance support to the eligible financing banks for the term loan
extended under the scheme. The extent and interest rate on refinance will be as
per instructions issued by NABARD from time to time.

4. The implementation of the scheme shall be monitored by a Central

Monitoring Committee at national level on half yearly basis. At the state level the
progress will be reviewed by the State Level Sanctioning and Monitoring
Committee (SLSMC) on a quarterly basis. The participating banks will conduct
periodic inspections of the units and give a feedback to the SLSMC on a
consolidated basis.
(Ref.No.NB.ICD.GSS/ 1585/DSRR-4/2009-10 dated 24 December 2009.Circular No. 219 /ICD-
46 /2009)

State-wise “Officers” at HO-SPD

The states have been allocated among officers of SPD in order to

coordinate the overall functions of SPD in respect of a particular State and to
facilitate two-way flow of information between HO and ROs. The role and
responsibilities of State Coordination Officers will be :

The officer would be functioning as RO’ “point” with SPD, HO for all
purposes, specifically on :

The issues relating to sanction, deletion and cost escalation of project

proposals.

The requirement in enhancement of normative allocation if required by RO

Additional information/clarifications, if required by HO

Timely posing of DMoS submitted by ROs

Special information required by ROs from SPD-HO such as the best
practices adopted by other ROs, innovative projects sanctioned in other
States, etc.

Progress in disbursement

Utilisation of Normative Allocation

Non-starter/ lapsed projects

Progress in conduct of High Power Committee meetings, etc.

Tranche Completion Reports

Monitoring : Targets and progress

(NB.HO.SPD / 629 / RIDF XV (Gen) / 2009-10 dated 07 December 2009. Circular No. 206 / SPD
08 / 2009)
 Grant Assistance to Self Help Promoting Institutions (SHPIs) for promotion
and credit linkage of SHGs - Revision of existing Guidelines

The norms of promotional grant assistance are revised as under :

Sr. Particulars Present Status Revised

No.
1 For formation and credit Maximum of 1) Maximum of Rs.5000 for
linkage of SHGs in hilly Rs.5000/- for group of 5 to 14 members.
districts of NER SHGs of 5 2) Maximum of Rs.6000/- for
members and SHGs of 15 to 20
above. members.

2 For formation and credit Maximum of 1) Maximum of Rs.5000 for

linkage in hilly districts of Rs.5000/- for group of 5 to 14 members.
Himalayan region in Jammu SHGs of 5 2) Maximum of Rs.6000/- for
& Kashmir, Himachal members and SHGs of 15 to 20
Pradesh, Uttarakhand & above. members.
West Bengal.

(Ref.no. NB.MCID/ 1160 /PG 11/2009-10 dated 21 December 2009.Circular No.211/ MCID 11
/2009)

Editorial Board - S. K. Mitra, Amaresh Kumar, P.L. Behera, Dr. Prakash Bakshi and V. Ramakrishna Rao
Edited and published by B. Jayaraman for National Bank for Agriculture and Rural Development, Bandra-Kurla Complex,
Mumbai-400051