SHG can receive revolving crdit also from banks.Revolving credit is a running account like a cash credit.Revolving credit will avoid opening of many loan accounts in the name of same group in the long run.More the turnover (by way of larger and frequent credit) in the account,higher will be the total loans availed by SHG from the account,by way of any number of withdrawls by the SHG to meet member’s loan needs,upto the loan sanctioned.The limit will be reviewed,every year.Based on the performance of revolving credit account and functioning of SHG,renewal/enhancement of limit can be considered by bank,in consultation with NGO and PIU at the end of every year.For fixing enhanced limits at the beginning of the second year,the group savings,as on the last day of first year,should be considered as the base.The option of sanctioning term loan or revolving credit is given to SHG and bank.Hence,revolving credit may be sanctioned to SHGs performing to SHGs performing well,very selectively. 

Margin

No margin is necessary,irrespective of loan amount.Group savings should not be blocked for meeting the margin money.Subsidy is not being condemplated under this scheme by TNCDW.However,other schemes,like TAHDCO and NBCFDC micro-credit schemes will be dovetailed with MT and made available to SHGs,with the same minimum eligibility criteria and credit rating system.Subsidy and margins would be as per the guidelines under the respective schemes.

Rate of Interest

The present interest rate structure,as stipulated by RBI/NABARD at different levels under SHG-Bank linkage Programme, is as under:

NABARD to SCB (Refinance) : 6.00%* 
Banks to Self Help Groups     : 9.00%*upto Rs.50000/- 
Self Help Groups to members : As per SHG’s decision
(*- Subject to revision from time to time as per RBI/NABARD guidelines)

Security: All group members are jointly and severally responsible for prompt repayment of loans.No collateral security will be insisted upon.Under no circumstances,group savings should be blocked as security.

Mode of Disbursement: Loan will be released in one Lump-sum or in stages,as requested by group to the credit of group’s savings account.As per group’s resolution,group will draw the amount and pay to needy members.

Repayment period

Terms Loan - There is no holiday for repayment.No fixed repayment period can be prescribed.Repayment period will be decided by bank and SHG,jointly.

Revolving Credit - It will be allowed to continue as running account. However, the turnover in the account, (credit summations during the year) should not be less than the limit sanctioned. At the end of every year, the account has to be reviewed and renewed by the bank after studing the group’s performance and suitable limit sactioned. However, interest charged by the bank for both term loan and revolving credit has to be paid by the groups promptly.

Contact Address

Tamil Nadu State Apex Co-op. Bank Ltd.,
233, Netaji Subhash Chandra Bose Road,
Chennai – 600 001.
Phone: 25340301, 25340304, 25340321,
25340351 ,25340391, 25340421.
Fax: 044-25340508.

Source: http://www.tnscbank.com/shg2.htm