Formation and Management of Shg and Micro Credit Organizations

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UNIT III
SHGs SAVINGS AND CREDIT MANAGEMENT
Savings & Credit Concept:
Savings and credit are inter related. It is proposed in a society for the significant development of the society. This both activities are much important to a SHG to bring economical changes in the lives of the people. Activities:

* Income generation
* Gainful employment
* Inculcation of saving habits
* Enhancement of social changes
* Ownership
Savings:
* A compulsory saving must be fixed for the development of the group * Voluntary saving must be encouraged
* The saving contribution should be in the form of cash
* Nobody should allow withdrawing his/her money before the set date * Receipt should be issued at every transaction
* All collection should be made during the meeting itself * Saving should be deposited in the bank by the accountant * Individual pass books should be issued to each member
* the pass books should be entered at every meeting after the collection is made

Credit:
With the mobilization of saving collected from the members for a period of month as fixed by the group, the saving and credit committee of the group should fulfil the needs of the members by disbursing small loans on an experimental basis to observe proper usage of the loan and whether members are prompt in loan repayment Credit function:

* SHG normally offer the small short-term loans
* Internal lending must be commenced
* Group must have system of priorities and purpose based loans * Overall credit needs evaluation
* Loans are to be disbursed in the presence of all members * Group must have the proper monitor till the end of the credit

Repayment:
* Repayment dates should be strictly adhered
* In order to increase the volume of the group certain fund must be collected from the members * Based on the nature of the loans the repayment date should be set * Fines should be charged to the member who violate the repayment scheduled * If any member wants to repay the loan accordingly the interest must be collected * Repayment should be made only by cash

Banking relationship:
* Try to open A/C in your area branch
* Regular saving will make good relation with the bank
* Terms and conditions should be liable to the member
* Banks must be encouraged to open account even wit out the photographs of the documents Opening of a saving bank account:
* The account should be opened after the first meeting
* Account can be opened in the name of SHG
* Minimum instalment for saving can be as low as possible Rules and regulations of credit management related:
1. The credit can be given to the needy members at the group for the purpose such as consumption, income generation asset creation 2. The credit shall be given to the needy members of the group only after careful study 3. The borrower should give a written agreement to the group to receive loan 4. The loan amount should be utilized for the agreed purpose only 5. The borrower should repay the credit /loan amount with the service charge 6. The members those who are irregular to the SHG will not be eligible to receive the loan 7. All members shall have equal opportunity to receive the loan 8. The group can receive donation for the development of SHG Records keeping:

* Admission register
* Attendance register
* Minutes book
* Individual pass book
* Receipt and payment voucher

LOAN APPLICATIO FORM

Personal information:

Application name : code:

Group name : code:

Village :

No. Of the family member :

Occupation :

About the Loan:

Purpose: Amount Request:

Expected period of repayment:

APPLICANT’S SIGNATURE:...
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