Joint Liability Group (JLG) | The Assam Co-operative Apex Bank Ltd. (ACAB)

About Joint Liability Group (JLG)

With the objective of anti-poverty programme, NABARD has come up with the system of lending under group approach named Joint Liability Group (JLG). It is one of the innovation of credit products and delivery system which help Banks to improve credit flow with advantage of low default risk, low transaction cost relating to appraisal, monitoring etc. This programme is basically designed for mid-segment of rural areas for facilitating Bank credit without collateral for implementation of various economic activities under group mode for economic growth of their members. Under this system, mid segment clients are to form a small group voluntarily and each member is eligible for Bank credit but all members are jointly and severally liable for payment of their dues.

Objectives:

To reduce risk cost and improve recovery performance
To reduce transaction cost.
To facilitate smoothening the flow of credit and serving a larger segment of the agrarian population.
To provide a greater degree of flexibility to the borrower to determine his/her needs and priorities

Eligibility and Functioning of JLG:

Membership of a JLG may be from 4 to 10, informally registered as a group with the Bank by executing an Inter-se agreement. Formal registration of JLG is not a must.
The undertaking offered by the group (by all members) enables them to jointly receive such amounts as deemed eligible by the Bank for pursuing any individual or joint activity, as found suitable by the group.
JLG members normally live in the same neighbourhood/ village and are from the same socio-economic background and environment.
JLG members will select a group leader for their operational convenience.

Loan details:

As per Bank’s policy, the minimum loan limit per individual should not exceed Rs 50,000/- including subsidy, if any. Members of the group will be eligible for repeated loan on regular recovery from all members.
The Rate of Interest will be applicable as per Circular issued from time to time.
Security-
- Hypothecation of assets created out of Bank Loan
- Inter-se Agreement and Article of Agreement