Financial Inclusion

Making poor preferred clients of financial institution

NRLM facilitates universal access to the affordable cost-effective reliable financial services to the poor. These include financial literacy, bank account, savings, credit, insurance, remittance, pension and counselling on financial services. The core of the NRLM financial inclusion and investment strategy is “making poor the preferred clients of the banking system and mobilizing bank credit”.

Capitalizing Institutions of the Poor

NRLM provides Revolving Fund and Community Investment Fund (CIF) as Resources in Perpetuity to the institutions of the poor, to strengthen their institutional and financial management capacity and build their track record to attract mainstream bank finance.

•NRLM provides Revolving Fund (RF) to SHGs of Rs.10,000-15,000 as corpus to meet the members’ credit needs directly and as catalytic capital for leveraging repeat bank finance. RF is given to SHGs that have been practicing ‘Panchasutra’ (Regular meetings; Regular savings; regular inter-loaning; Timely repayment; and Up-to-date books of accounts).

•NRLM provides Community Investment Fund as Seed Capital to SHG Federations at Cluster level to meet the credit needs of the members through the SHGs/Village Organizations and to meet the working capital needs of the collective activities at various levels.

•NRLM provides Vulnerability Reduction Fund (VRF) to SHG Federations at Village level to address vulnerabilities like food security, health security etc., and to meet the needs of the vulnerable persons in the village.

Access to Credit

NRLM expects that the investment in the institutions of the poor would leverage the bank credit of at least Rs.1,00,000 /- accessible to every household in repeat doses over the next five years.For this, SHGs go through Micro-investment Plan (MIP) process periodically. MIP is a participatory process of planning and appraisal at household and SHG levels. The flow of the funds to members/SHGs is against the MIPs. NRLM has provided interest subvention for all eligible SHGs to get loans at 7% per annum from mainstream financial institutions. Further, additional 3% interest subvention is available only on prompt repayment by SHGs in most backward 250 districts.

SHG-Bank Linkage:

                              SHG-Bank Linkage is one of the largest Micro Credit Initiatives in the world. Micro-Credit has proven to be the most effective tool for poverty alleviation and livelihoods promotion. Bank Linkage plays a vital role in meeting the credit requirements of rural households mobilized into WSHGs through formal financial institutions. i.e Banks. SHG-Bank Linkage programme emphasizes on nurturing the SHGs and its members to be preferred clients of the Banks and building long term relationship between poor households and Banks. Under NRLM, it is emphasized that multiple doses of credit of atleast Rs.1 lakh per household over a period of 4-5 years is required to promote sustainable livelihoods and poverty alleviation.

                             Odisha has been a pioneer in SHG-Bank Linkage. During FY 2014-15, 44,867 WSHGs have been credit linked with an amount of Rs.527.48 Cr. For FY 2015-16 the SHG-Bank Linkage target for the State is 724.14 Cr to 60,346 WSHGs. As on 30th November 2015, 31,611 WSHGs have been credit linked with an amount of Rs.351.85 Cr. In addition to Bank Linkage, a Strategy for NPA Management for FY 2015-16 has been devised and implemented by OLM. The Strategy implemented under SHG-Bank Linkage uring FY 2015-16 are as follows

1.Positioning of Bank Sakhis (Bank Mitras) in all Bank branches of Intensive Blocks.

2.Formation of Bank Linkage and Recovery Committee in all Bank branches of Intensive Blocks.

3.Organization of SamanwayaMela (Bankers-SHGs interface meet) to clear pending applications, SHG-NPA recovery, Financial Literacy and resolving issues related to SHG-Bank Linkage.

4.Identification of point person at Block level for each Bank branch for better co-ordination.

5.Regular Training and Capacity building of Community cadre, Bankers and project staff. 

6.State Resource Pool of senior retired Bankers for capacity building of Bankers and Project staff.

7.Organization of District Level Bankers Sensitization programme to create an enabling environment for SHG-Bank Linkage.

8.Financial Literacy training for Community cadre viz CRPs, MBKs and Bank Mitras in partnership with RBI.



Interest Subvention:

                               Interest Subvention under NRLM and Government of Odisha scheme aims at reducing the interest burden on WSHGs by ensuring access to credit at affordable rate of Interest and incentivizing prompt repayment. In Category-I districts (18 IAP districts), Banks to lend to all WSHGs at 7% interest rate (under NRLM). In addition, 3% Interest Subvention is provided by NRLM and 2 % by Government of Odisha for prompt payee WSHGs making the effective rate of Interest to 2%. In Category-II districts (12 Non-IAP districts), the effective rate of Interest for prompt payee WSHGs will be 2% after Interest subvention benefit from Government of Odisha and Government of India.

Achievement as on 30th November 2015:

•In Category-I districts (18 IAP district), Interest Subvention of Rs.3.66 Cr has been released to 37,724 WSHGs under Government of Odisha scheme.

•In Category-II districts (12 Non-IAP district), Interest Subvention of Rs2.94 Cr has been released to 18,006 WSHGs under Government of Odisha scheme.

•In Category-II districts (12 Non-IAP district), Interest Subvention of Rs.5.29 Cr to 39,824 WSHGs has been released under NRLM.



Bank Linkage and Recovery Committee

Promoting Institutions of the Poor and Communitisation are the major principles of NRLM. The Bank Linkage and Recovery Committee (BLRC) is a Community based Bank Linkage and Recovery mechanism in lines of Communitisation under Financial Inclusion. Bank Linkage and Recovery Committees are formed in Bank Branches of Intensive Blocks. The Bank branch Manager is the Chairman-cum-Convener of the Committee. Members of the Committee are representatives from GPLF, Bank Mitra, MBK and 2 PRI members as special invitees. The objective of BLRC is to promote NPA free Bank branches, facilitate SHG-Bank Linkage and resolve other issues related to SHG-Bank Linkage. The BLRC meetings are conducted once in every month at Bank Branch. 569 Bank Linkage and Recovery Committees have been formed in Bank branches of 88 Intensive  Blocks in Odsiha as on 30th November 2015