1. Summary
  2. Business Model for finance Joint Liability Groups
  3. Support from NABARD
    3.1 Incentive from NABARD for promotion of JLGs
    3.2 Training of dedicated team of Master Trainers
    3.3 Mentoring


JLG is a crucial tool for augmenting the flow of credit to landless farmers cultivating land as tenant farmers, oral lessees, sharecroppers, small/marginal farmers, and different poor people for taking over the farm, off the farm and non-farm activities. Although extending bank loans through Joint Liability Groups (JLGs) has been verified to be a sure-fire initiative for purveying collateral-free credit through the industry within the rural areas, the flow of credit to the landless poor, tenant farmers, small/marginal farmers remains inadequate. To rescale the JLG finance, “Business Model theme on finance JLGs” for SFBs and scheduled personal Sector Banks have been developed whereby, NABARD can enter into a Bipartite or trilateral MOU with Banks directly or with BC /NGOs is determined.

Business Model for finance Joint Liability Groups

The JLG approach may be a major product propagated by NABARD for purveying small finance in rural India for meeting the credit desires of little / Marginal farmers / Tenant / Oral lessees and sharecroppers and micro-enterprises in the Off-farm sector to reinforce opportunities for sustenance in terms of financial gain and employment by creating on the market collateral-free credit through the industry. It’s ascertained that the progress underneath the JLG theme has been but satisfactory. Whereas some RRBs, Cooperative Banks, and Public Sector Banks are taking part in JLG disposal with/without our JLG Promoting Institution (JLGPI) support, the performance has been lackluster and lots of banks haven’t participated whole-heartedly for lack of adequate focus.

After analysing the bottom state of affairs and keeping the scope of utilizing the network of BC Agents, it’s felt that as directed by run batted in within the JLG pointers of November 2014, Banks will simply co-opt BCs/ CSPs for usurping a Business supporter role and twine them certain formation, observance and lengthening handholding support to the JLGs as add on operate. A number of the PSU banks and a couple of RRBs are already utilizing the services of BCs as BF (JLGPI) for deepening their JLG portfolio with sensible results. This not solely externalizes a number of the bank’s functions – in the main of observance, making certain high bit, hand-holding, and following up for timely repayments however conjointly allows the BC Agents to urge extra financial gain from managing the JLGs.

It is urged that to rescale the JLG approach in their areas, Banks could contemplate the route of going MOU with Regional workplaces of NABARD or Head Office of NABARD (in case of Pan India Project) with the provision of assured support from NABARD, wherever the involved bank shall take the vexation of extending credit support to JLGs on terms and conditions to be reciprocally determined upon. Where banks enter into a rendezvous with company BCs for Business Facilitation as JLGPI, a trilateral agreement may be additional appropriate which can also specify the service charges to be shared by the BC agent with the company BC. In cases wherever banks don’t have sensible BC networks or realize it convenient to interact with known NGOs to act as JLGPI, a trilateral agreement between Bank, the organization and NABARD could also be entered into. The capability of NGOs in terms of convenience of the team of animators and Project Managers would be crucial for delivery.

Support from NABARD

Incentive from NABARD for promotion of JLGs

NABARD will support the Banks for formation, nurturing, and finance of recent JLGs at Rs. 4,000/- per JLG for passing on to company BC/ NGO-JLGPIs.

  • The First installment of Rs. 2,000/- would be free once disbursement of loan by the bank.
  • The Second installment of Rs. 1,000/- would be free once one year from the date of loan disbursement subject to the certification by the finance bank that the loan compensation is regular / while not default by all the individual members of the JLG.
  • Third installment of Rs. 1,000/- would be free on the closure of the loan account by all members of JLG or once the tip of the second year from the date of loan disbursement subject to similar certification from finance bank, whichever is early.

Training of dedicated team of Master Trainers

A pool of master trainers comprising of known officers from the Bank’s Head workplace, Bank’s Regional workplace, and also the involved Project workers of company BC/ NGO-JLGPI would be created by transmission them coaching on the nuances of JLG approach, management of JLG portfolio and MIS of JLGs. The coaching program is going to be organized and supported by NABARD for the Banks that have signed an MOU or a trilateral agreement for scaling up JLG finance.


NABARD through knowledgeable and intimate can undertake, on-location mentoring of involved Bank officers, company BC and BC Agents. The planned mentoring is anticipated to upgrade the talents of various stakeholders in playing their roles and responsibilities and modify managing an honest JLG portfolio.