RBI asks co-op banks to monitor NPA level in SHG’s

The Dollar Business Bureau

The Reserve Bank of India has asked the co-operative banks to “immediately start” monitoring the non-performing assets(NPA) in the Self Help Group segment. They have also stressed on the credit ratings of the same. The RBI had earlier asked the co-operative banks to report the member level data and the credit information relating to SHG and its members.

RBI said that the requirement of the information will be implemented in two phases. Phase I will start from 1st of July 2016 and will last for one year. Phase II will be implemented from 1st July 2017 and expects that credit related information will increase during this period.

The reporting and the collection of this credit information will be restricted to those SHG members who take a bank loan exceeding Rs.1 lakh and that the banks should start monitoring the NPA levels in the SHG segment regularly.

RBI on its part will be collecting detailed information from SHG members who would be availing a loan exceeding the lower threshold of Rs.20,000, if the net NPA amount in the segment exceeds 10 percent. RBI further added that the banks should also encourage the SHG’s to keep a written record of the loan that is being distributed to the members, which includes the digitization scheme for SHG’s of NABARD. They also may consider introducing appropriate incentives for the same.