National Rural Livelihood Mission (NRLM) : An Overview

National Rural Livelihood Mission (NRLM) is a poverty alleviation project implemented by the Ministry of Rural Development, Government of India. This scheme is focused on promoting self-employment and the organization of the rural poor. The basic idea behind this program is to organize the poor into SHG (Self Help Groups) groups and make them capable of self-employment. In 1999 after restructuring Integrated Rural Development Programme(IRDP), Ministry of Rural Development (MoRD) launched Swarnajayanti Grameen Swarojgar Yojana (SGSY) to focus on promoting self-employment among the rural poor. SGSY is now remodeled to form NRLM thereby plugging the shortfalls of the SGSY program. This PPT helps you to know about NRLM briefly.

1. National Rural Livelihood Mission(NRLM): An Overview Presented by- Sayan Ghosh

2. What is NRLM It is a flagship program of GoI under the MoRD . It was launched in June, 2011. It was the restructured version of SGSY

3. Progression 3

4. How is it different from SGSY? Issue SGSY NRLM Target Groups Women, Men & Mixed SHGs Only Women SHGs RF Linked with CC Directly credited to SB A/c, not Linked with CC Capital Subsidy Linked with TL (Project Loan) No provision of Capital Subsidy Nature of Bank Credit After 1 st Grading: RF-linked CC After 2 nd Grading: Subsidy-linked TL After Initial Grading: – CC (not linked with RF) After Subsequent Grading: – Enhancement of CC & or TL ( not linked with Subsidy) Amount of Bank Credit Up to 4 times of Group Corpus Need-based, not linked with Group Corpus; 1 st time credit limit - minimum Rs. 1,25,000 Repeat Financing No specific provision Repeat financing must so that after 5-7 years every member gets loan limit of Rs 1,00,000 minimum. Interest Subsidy No provision Provision is there for loan provided to women SHGs up to Rs . 3 lakh not linked with capital subsidy under SGSY Support of Community Not specified Engagement of CSP – Bank Linkage / ” Bank Sakhi ” at Bank branches Community–Based Recovery Mechanism (CBRM)

5. Structure of NRLM (From Top to Bottom)

6. Timeline of Implementation at Block Level NRLM intends to work in a block for a period of 10 years till Community Federation take responsibility of implementation.

7. Ways of Implementation at Block Level

8. Institutional Architecture LEVEL SHG INSTITUTIONS MAHASANGHA SANGHA/C.L.F UPA SANGHA/V.O SHG BLOCK GRAM PANCHAYAT WARD/SANSAD HAMLET/VILLAGE Members’ Profile : 35.5% SC ,8% ST , 25.2% Minorities , 4.2% Widows , 10-20 members from poor womenfolk Thrift & credit activities Monitoring group performance Micro Credit Planning(MCP) Household investment planning E.C-2 from each SHGs, 5 office bearers Strengthening of SHGs Arrange line of credit of the SHGs Social Action Village Development Marketing & food security Support Activists/Sub-Committee: 3-5 E.C- 2 from each V.O, 5 office bearers. Support to V.Os Secure linkages with Govt. departments, financial institutions & markets Auditing of groups Micro Finance functions Monitoring & Evaluation of the whole functions

9. Self Help Group(SHG) 10-20 members from poor womenfolk (For hilly area the minimum number of members are 5) The womenfolk are from the same locality. Member must be more than 18 years of age. SHG should have 3 office bearers i.e. I. President , II. Secretary & III. Accountant . Opening of Bank Account. Practice of Panchasutra i.e. -#1. Regular Meetings (4 Meetings in a month) -#2. Regular Savings (A fixed amount of money will save in SHG’s Bank A/C in every month) -#3. Regular Inter-Lending/taking loans -#4. Regular Repayment -#5. Regular Maintain of Books (I. Handbook; II. Cash Book; III. Saving Book; IV. Loan Book; V. Minutes/Resolution Book)

10. Upasangha /Village Organization (V.O) Each Sansad have at least one V.O. Each V.O have 3-25 SHGs (If there will have more than 25 SHGs in a Sansad then an another V.O should be formed). Each member of each SHG should be the member of V.O. V.O meeting will conduct 2 times in a month. In V.O meeting 2 members from each SHG will attend the meeting. They will be the representatives of that SHGs for the V.O. V.O have 5 office bearers i.e. President , Vice President , Secretary , Asst. Secretary & Accountant . Each V.O have a Bank Account. As per norms, a V.O should have at least 3 and maximum 5 Sub-Committees i.e. I. SHG Monitoring Sub-Committee , II. Livelihood Sub-Committee , III. Social Action Sub-Committee , and another two will formed based on the problems in the villages.

11. Sub-Committee is the main base of a V.O. Each Sub-Committee should have at least 3-5 member. The membership of Sub-Committee is Voluntary Basis. The responsibilities of Sub-Committees is as follows: -#1. SHG Monitoring Sub-Committee : V.O is responsible for strengthening and arrange the line of credit to the SHGs of that particular V.O. -#2. Livelihood Sub-Committee : V.O is responsible for livelihood development of the women of that particular V.O. -#3. Social Action Sub-Committee : V.O is responsible for development of that particular village and also responsible for taking action against the social problems of that village. Sub-Committee of Upasangha /V.O.

12. Funds of SHG

13. SHG Bank Linkage SHG Bank Linkage Programme was newly starts in 2014 as per the guideline of NABARD & RBI. The introduction of Community Based Repayment Mechanism (CBRM) and Community Service Provider-Bank Linkage (CSP-BL) is the main two component of this SHG Bank Linkage Programme According to NABARD, the continuous activity of a SHG as per the SHG Bank Linkage Programme should be: From 1 st Meeting 2 months 3-4 months 6-8 months 6-12 months

14. Funds from Federation Revolving Fund (RF) : NRLM provides Revolving Fund (RF) for SHGs after 3-4 months of formation. Every SHG get ₹ 10,000 - ₹ 15,000/- as RF. The SHGs will got the RF as per the assessment report after 3-4 months. This fund is given to the SHGs for continuing the internal lending among the members of the SHGs.

15. Community Investment Fund (CIF) : NRLM provides CIF to the Sangha(CLF) and Upasangha as a resource in perpetuity to capitalize the institutions of the poor in three forms i.e. -#I. Seed Capital: Provides to the Sangha(CLF) for onward lending to SHGs via SHG Federation(V.O) at the village level against after assessment of the SHG’s micro-investment/micro-credit plan . CIF equivalent to ₹ 60,000 – ₹ 1,10,000 per SHGs, is provided as a capital in perpetuity to each Sangha(CLF). -#II. Vulnerability Reduction Fund: Provides to the village level primary federation of SHGs (V.O) as per need for meeting the special needs of the vulnerable people on one hand and for addressing members’ different vulnerabilities like food insecurity, malnutrition, health risks, high cost debts and emergencies etc. -#III. Livelihoods/Layering Fund: Provides to the SHGs/SHG Federations(V.Os) as per need and other collectives to support the deficit, if any, in the funding clear feasible and viable business plans. Funds from Federation

16. Bank Loan : As per NRLM guideline the SHGs can get loan from the banks. The bank loans are of two types: Cash Credit (CC) Loan: Banks advised to sanction minimum loan of ₹ 5 Lakhs for a yearly period of 5 years to each eligible SHGs after assessment. The rate of interest for this loan varies bank to bank but for intensive blocks the rate of interest is fixed as per NRLM guideline i.e. 7%. But if a SHG repay the loans between the said time period then the bank returns 3% of interest amount to the account of that SHG. In that case, the rate of interest becomes 4%. This return of 3% interest rate given to that SHG is like a reward for timely repayment of loan. The loan have a yearly drawing power(DP). The drawing power may be enhanced annually based on the repayment performance of the SHG. The DP may be 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 review/ enhancement or minimum of Rs 2 lakh, whichever is higher. -# DP for Third Year: Minimum of Rs 3 lakhs 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: Minimum of Rs 5 lakhs based on the Micro credit plan prepared by SHG and appraised by the Federations /Support agency and the previous credit History. Funds from Federation

17. Example: Fixation of Credit Limit -No. of SHG members: 15; -Periodicity of meetings and savings: Once a month; -Monthly savings amount of each SHG member : Rs.100/-; -Total monthly savings by the group : Rs.100 x 15 = Rs.1500/-; -Projected savings of the group after 5yrs. : Rs.1500 x 60(month) = Rs.90,000/- Therefore, CCL that can be sanctioned for 5yrs (8 times of saving at the end of 5 years): Rs.90, 000 x 8(times) = Rs.7, 20,000/-. Fixation of Drawing Power [DP] assuming that the group saves regularly -1st year : Savings = 1500 x 12 (month) = Rs 18000 DP for 1st year : 6 times of corpus or minimum Rs 1,00,000 -2ndyear : Savings till 24 months = 1500 x 24(month) = Rs 36,000 DP for 2nd year : Eight times of corpus or minimum Rs 2,00,000 -3rdyear : Savings till 36 months = 1500 x 36 (month) = Rs 54,000 DP for 3rd year : minimum Rs 3,00,000 and so on Funds from Federation

18. -Term Loan: In case of Term Loan, banks are advised to sanction loan amount for the SHGs. The rate of interest for that type of loan fixes as per the banks rule. At a time one SHG can take both CC Loan and Term Loan as per the SHG’s credit repayment history. Banks are advised to sanction loan amount in doses as mentioned below: First Dose: 6 times of the existing corpus or minimum of Rs 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 Rs 3 lakhs based on the Micro credit plan prepared by the SHGs and appraised by the Federations /Support agency and the previous credit History. Fourth Dose: Minimum of Rs 5 lakhs based on the Micro credit plan prepared by the SHGs and appraised by the Federations /Support agency and the previous credit History. Banks should take necessary measures to ensure that eligible SHG are provided with repeat loans. Funds from Federation

19. Grading of SHGs Grading is undertaken primarily for assessing the institutional and financial discipline of the SHGs. Grading enables external financial and other institutions to understand the quality of SHGs. Grading also enables identification of the strengths and weaknesses of SHGs and facilitates interventions for their improvement. The responsibility of grading SHGs should be eventually undertaken by VOs. The VOs should regularly undertake review of the performance of SHGs on the basis of their gradation. Grading of member SHGs should become a part of the agenda of VO meeting

20. Grading Exercise SHG Life Cycle Stage Purpose of Grading Grading Parameters Who will Grade Before disbursal of RF (3-4 Months after formation of SHG) For judging readiness /eligibility of SHG to receive RF Panchasutra In case VO is formed and the SHG is a member of VO : V.O will Grade the SHG In case VO is not formed, or SHG is not a member of VO : grading will be done by an informal village level committee involving members from other SHGs facilitated by CRP/ Community cadres Before disbursal of CIF (6-9 Months after formation of the SHG) For judging readiness /eligibility of SHG to receive CIF MCP prepared Panchasutra In case VO is formed and the SHG is a member of VO: V.O will Grade the SHG. In case VO is not formed, or SHG is not a member of VO: grading will be done by block/ cluster level appraisal committee involving members from other SHGs facilitated by CRP/ Community cadres. Before credit linkage of SHG (first linkage) – (6 months after the formation of SHG or before submission of application for credit linkage) For judging readiness /eligibility of SHG to receive bank credit. MCP prepared (not mandatory till 2nd linkage) Panchasutra In case VO is formed and the SHG is a member of VO : VO will Grade the SHG In case VO is not formed, or SHG is not a member of VO : grading should be done by an informal village level committee involving members from other SHGs facilitated by CRP/ Community cadres. Branch Official/ Authorized representative of banks may also be involved for grading . Before credit linkage of SHG (subsequent linkages) – (Within 2 Months of repayment of previous loan or before submission of application for bank loan) For judging readiness /eligibility of SHG to receive Bank Credit MCP prepared (Mandatory from 3rd linkage onwards) Panchasutra In case, VO is formed and the SHG is a member of VO: VO will grade the SHG. In case VO is not formed, or SHG is not a member of VO: grading should be undertaken by an informal village level committee involving members from other SHGs facilitated by CRP/ Community cadres Branch Official/ Authorized representative of banks may also be involved for grading.

21. SHG Grading Format for Fresh Linkage

22. SHG Grading Format for Repeat Linkage

23. Thank You