NABARD and State Bank of India sign MoU with NGOs for Financing of Joint Liability Groups (JLGs) in West Bengal

 The MOU signing event was held in the Conference Hall of West Bengal Regional Office of NABARD. Apart from Shri Partha Pratim Sengupta, CGM, SBI, LHO and Shri A.K.Raybarman, CGM, NABARD West Bengal Regional Office, the event was graced by Shri S C Murmu, RD, Reserve Bank of India, Senior Officials of SBI and NABARD as also the CEOs and other office bearers of the five NGOs viz. Dakshini Charaikhaeya United Club, Purba Medinipur, Calcutta Society for Profession in Action Development, Purulia, Animate Society, Burdwan, Rural Development Consortium, Paschim Medinipur and Gobardanga Seba Farmers Samity, North 24 Parganas.

On this occasion , G R Chintala, Chief General Manager of Micro Credit Innovation Department, NABARD Head Office, addressed the house and informed that 24.5 lakh JLGs have been credit linked by the banks in the country of which 7.02 lakh JLG were financed during 2016-17. He also emphasized that the public sector banks like State Bank of India need to play a major role in future.

S C Murmu, Regional Director, RBI expressed his happiness on the historic occasion and opined that the innovative nature of the social collateral, used under JLG mode of financing, will help in achieving the goal of 100% coverage of the tenant farmers of the State under institutional finance in the shortest possible time. He stated that the JLG promotion requires facilitators like NGOs who would take care of the education and financial literacy needs of the farmers. This model is a win-win situation for all the stakeholders.

Gracing the occasion CGM, SBI expressed his immense happiness on the signing of the MoU for promotion of 2500 JLGs in the State as the same will facilitate SBI to extend financial assistance to the financially excluded sections of the society, especially landless farmers, which has always been a top priority for the SBI, and hoped that the project will be up scaled in a phased manner to cover the remaining districts of the State. He indicated that JLGs, basically are credit groups of small/marginal/tenant farmers who do not have proper title of their farmland. Elaborating on the concept of JLG, he further stated that JLGs are informal groups of 4-10 members who are engaged in similar economic activities and who are willing to jointly undertake to repay the loans taken by the Group from the Banks. Regular savings by the JLG members is purely voluntary and their credit needs are met through loans from financial institutions and such loans could be individual loans or group loans against mutual guarantee. As each JLG will have at least 4-10 members, around 12500 tenant farmers can be extended institutional finance under the present arrangement.

A K Raybarman, CGM, NABARD highlighted the plight of tenant farmers/ oral lessees and share croppers in many parts of the state due to the denial of access to institutional credit, disaster relief, and other support services due to the lack of title to land. A pilot project was initiated by NABARD in 2004-05 in 8 States with the support of 13 RRBs to address the problems of actual tillers of land by introducing the concept of financing them in JLG mode. Encouraged by the results the scheme was later mainstreamed for the banking system in the year 2006-07. \

However, the product needs further nurturing and NABARD has been partnering with various JLG- Promoting Institutions (JLGPIs) to facilitate the promotion of quality JLGs which can then be supported by different financial Institutions. For the year 2017-18 NABARD has fixed a target of 80 thousand s JLG to be credit linked in West Bengal. Over the years, NABARD has sanctioned assistance for promotion of 60,000 JLGs by various NGOs in the state through 339 projects in different districts. Through signing of the MOU, SBI and NABARD intend to jointly support the promotion of quality JLGs who can then be considered for financing in a hassle-free manner by SBI under agriculture & allied sector through 5 years KCC for seasonal crop cultivation / term loans/ allied activities.

This mode of financing would also minimise the risks in the loan portfolio for the SBI.

He lauded the initiative of the SBI to collaborate with NABARD in this regard with a prior commitment to take care of credit needs of tenant farmers and expressed his confidence that more and more Commercial Banks will come forward to collaborate in this regard as SLBC is also supporting the cause in a big way in its endeavour to provide KCC to all the tenant farmers of the State. He further mentioned that NABARD would also be extending refinance support to the financing Bank apart from extending financial support to the JLGPIs @ Rs.2000 per JLG for the formation and credit linkage of JLGs to the five NGOs.