JAIIB PPB Paper-2 Module-B Unit 20: Self-Help Groups

31/03/2023

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JAIIB Paper 2 (PPB) Module B Unit 20: Self-Help Groups (New Syllabus)

The IIBF has recently announced updates to the JAIIB Exam 2023, including changes to the syllabus and exam format. Candidates will now be required to complete four papers, with Paper 2 (Principles & Practices of Banking) covering Unit 20: Self-Help Groups. This unit is particularly crucial for candidates, as it will significantly impact their performance in the exam.

To assist candidates in understanding the topic, we will provide all the necessary details related to Unit 20: Self-Help Groups of JAIIB Paper 2 (PPB) Module B: Functions of Banks. We strongly recommend that candidates refer to this article and utilize our Online Mock Test Series to enhance their understanding of Foreign Currency Accounts for Residents and other related aspects.

Candidates must comprehend each unit in the syllabus, including the Marketing unit, to excel in the JAIIB Certification Examination 2023 and establish a successful career in the banking sector. This unit is of great importance in the banking industry, and candidates must prepare thoroughly.

Self–Help Groups

Self-Help Group’ (SHG) is a voluntary association of poor formed with the common goal of social and economic empowerment. Micro- finance through SHGs offers best form of credit for reaching the unreached and the under reached.

SHGs help in development of poor through various benefits:

Mobilising resources of individual members for collective development
Uplifting living conditions of poor
Creating savings habit
Mobilising individual skills for group’s interest
Assisting members financially at the time of need
Entrepreneurship development
Identifying problems, analysing and finding solutions in the group
Organise training for skill development

Forming Self–Help Groups

Number of Members: Normally, members in a group should not exceed twenty; otherwise, registration becomes compulsory. Generally, a SHG may consist of 10 to 20 persons. In difficult areas like deserts, hills, etc. it may have just 5 members.
Family Income Criteria: Generally, all members should belong to families below the poverty line (BPL). If necessary, maximum 20% and exceptionally upto 30% of members may be from families marginally above the poverty line (APL) living contiguously with BPL families.
Subsidy Eligibility: Only BPL members will be eligible for subsidy.
Management of Group: BPL families must participate in management and decision making. APL members not to be office bearers.
Restrictions on Membership: SHG not more than one member from same family.
Code of Conduct: The group should devise Group management norms to bind itself.
Building Corpus: It should build corpus through regular savings contributed by members.
Loans to Members: Corpus fund should be used to advance loans to members.
Bank Account: To have a group’s bank account preferably in service area bank branch.
Records: It should maintain simple basic records such as minutes book, attendance register, loan ledger, general ledger, cash book, bank passbook of the group and individual members’ passbooks.

Self–Help Groups Bank Linkage

Opening of Savings Bank A/c: SHGs, registered or unregistered, which are engaged in promoting savings habits among their members are eligible to open savings bank accounts with banks.
Lending to SHGs: SHGs may be sanctioned savings linked loans by banks (varying from a saving to loan ratio of 1:1 to 1:4)
Interest Rates: The banks can decide the interest rates, as per regulatory guidelines.
Service/Processing Charges: No service charges/inspection charges should be levied on loans up to Rs. 25,000 per member, in case of eligible priority sector loans to SHGs/JLG.
Presence of defaulters in SHGs: If SHG is not in default, some members being defaulter should not detract from financing the SHG.
Capacity building and Training: Banks to internalize the SHG linkage project and organize exclusive short duration programmes for field level functionaries.
Monitoring and Review of SHG Lending: Monitoring of SHG bank linkage Programme should be discussed at the SLBC and DCC meetings.
Reporting to CICs: Credit information reporting should be done as prescribed.