Joint Liability Group is a concept established in India in 2014 by the rural development agency National Bank for Agriculture and Rural Development (NABARD) to provide institutional credit to small farmers.
Joint Liability Group is a group of 4-10 people of same village/locality of homogenous nature and of same Socio Economic Background who mutually come together to form a group for the purpose of availing loan from a bank without any collateral.
Video Joint Liability Groups
What is the Purpose of JLG?
- Providing Credit to Small and Marginal Farmers, Tenant Farmers, Oral Lessee, Landless Labourers and Artisans
- Providing Collateral free Loan to Groups
- Building Confidence between Groups and Banks
- To mitigate the credit risk by way of group dynamics, peer pressure, credit discipline and cluster approach.
- To provide self-employment and increase production of agricultural products.
Maps Joint Liability Groups
What are the features of JLGs?
- Members should have a common activity.
- Members need not to have a land title.
- Members should be of the same village.
- Only One member of a family can become a member of JLGs.
- Members should not be a defaulter of bank loan.
- Member should hold regular meetings.
Who can promote JLGs?
JLGs can be promoted by Business Facilitators/Correspondents, NGOs, Farmers Clubs, Farmers Federations, Panchayati Raj Institutions, Agricultural University, Bank Branches, PACS, Cooperative Societies, Individuals, mFIs and Many Others.
What is difference between SHG and JLG?
SHG is primarily an Saving oriented groups in which borrowing power is determined based on its saving. However, JLG is a credit oriented group which is primarily formed to avail loan from the bank/formal credit institutions.
What are the Models of JLG ?
A bank can finance a JLG in two ways either financing to group directly or individual in the groups. In both of the cases all members of JLG is responsible for repaying the loan amount.
Documents Required by Bank for JLG
JLG should be first promoted by any individuals/institutions (JLGs Promoting Institutions). Thereafter, bank requires KYC, Loan Application, Inter Se Agreement and DPN.
What is the role of JLG Promoting Institutions?
- Maintaining Account Register for Credit Linkage and Repayment Details Register
- Capacity Building of JLG members
- Explaining the benefits of JLGs to Members/banks.
National Bank for Agriculture and Rural Development (NABARD) - JLGs Scheme
NABARD supports formation of JLG in project mode for availing micro credit from banks through all its offices across India. The scheme is implemented through good NGO, Farmers Clubs etc. NABARD has published one booklet on Success Stories of JLGs which is available on its website.
References
Source of the article : Wikipedia
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