Self Help Groups (SHG)

are linked to the formal banking system in India (NABARD Status of Microfinance Report, 2024-25).

Panchsutra: Regular Meetings; What it means: Weekly / fortnightly meeting at a fixed time and place; Why banks insist on it: Builds group cohesion; banks use minutes as audit trail

Panchsutra: Regular Saving; What it means: Each member saves a fixed agreed amount every meeting; Why banks insist on it: Generates the corpus that acts as margin

Panchsutra: Regular Inter-loaning; What it means: Members lend to each other from the corpus; Why banks insist on it: Demonstrates internal credit discipline

Panchsutra: Regular Repayment; What it means: All internal loans are repaid on time; Why banks insist on it: Establishes track record for bank linkage

Panchsutra: Maintenance of Books / Book-keeping; What it means: Cash book, member ledger, minutes book, savings register; Why banks insist on it: Mandatory for grading and SHG-2 rating by banks

Description: SHGs formed and financed directly by banks; Who promotes the SHG?: Bank itself; Who finances?: Bank

Description: SHGs formed by NGOs / Govt agencies, but financed by banks (most common — ~75% of all SHGs); Who promotes the SHG?: NGO / Govt agency; Who finances?: Bank