Credit information reporting in respect of Self Help Group (SHG) members

भारतीय �रज़व र् बक� RESERVE BANK OF INDIA www.rbi.org.in RBI/2015-16/ 291 DBR.CID.BC.No.73/20.16.56/2015-16 January 14, 2016 All Scheduled Commercial Banks (including RRBs) All Credit Information Companies Dear Sir/ Madam Credit information reporting in respect of Self Help Group (SHG) members Please refer to the instructions contained in paragraph (v) of the Annex III to our circular DBOD.No.CID.BC.127/20.16.056/2013-14 dated 27 June, 2014 advising banks to report the member level data relating to the SHGs within six months from the date of the circular. 2. A review of the implementation of the aforesaid directions by the Reserve Bank of India (RBI) revealed that banks had not made a significant progress in this regard. The banks also pointed out a number of challenges in implementation of these directions and requested for greater clarity on their scope. Consequently, the RBI constituted a working group with members from within RBI, NABARD, banks and credit information companies (CICs), to study the implementation challenges and suggest measures to address them. 3. Underscoring the importance of credit information reporting in respect of the SHG members for financial inclusion, credit decision of banks and Micro Finance Institutions (MFIs) and credit quality of the SHG loan portfolios, the working group has emphasised the need for putting in place the credit information reporting for SHG members sooner than later. Nonetheless, the group has suggested following a phased approach to the implementation of the RBI direction so as to ensure that the data quality is not compromised. This circular sets out the implementation requirements in the first two phases. ब��कंग �व�नयमन �वभाग, क�द्र�य कायार्लय,13 मंिजल, क�द्र�य कायालर् य भवन, शह�द भगत �सहं माग,र् मम्ु बई 400001Department of Banking Regulation, 13th floor, Central Office Building, Mumbai 400001 Tel No: 22661602, 22601000 Fax No: 022-2270 5670, 2260 5671, 5691 2270, 2260 56922 II. Structure of credit information collection and reporting 4. The structure of the credit information in respect of SHG members to be collected and reported by banks to the CICs is set out below. 1 Information to be collected by banks from individual SHG Table 1 members where the total amount of loan to be attributed to or to be availed by the SHG member exceeds Rs.30,000/- 2 Information to be collected by banks from individual SHG Table 2 members where the total amount of loan to be attributed to or to be availed by the SHG member is upto Rs.30,000/- 3 Information on all individual SHG members to be reported by Table 3 banks to CICs 4 Information on individual SHG members to be collected by Table 4 banks at the time of opening of new Savings Bank Accounts of the SHG 5. The data tables are given in the Annex. As indicated above, banks shall collect information from all SHG members in Tables 1 and 2 and report it to the CICs as set out in Table 3. The tables have been designed based on the following considerations: (i) Some of the information (Item number 17 of Tables 1 and 2) is related to the existing exposures of the SHG members including that of the SHG groups with whom they might have been previously associated. This is intended to help banks make informed credit decisions with regard to the SHG members. This information may be collected by banks directly from the CICs based on lead information provided by the SHG members. Hence, there would be no need for banks to include this information in the dataset reported to the CICs as per Table 3. (ii) The information requirements will be implemented in two phases. The first phase will commence from 1 July 2016 and last for one year. The depth of the credit-related information to be collected would increase in Phase II to be implemented from 1 July 2017. Additions/modifications to be effected during Phase II are indicated in the last column of Tables 1 and 2. (iii) The collection and reporting of credit information in respect of SHG members will be restricted to the members of those SHGs that take bank loans exceeding Rs. 1,00,000/-. However, the members of all SHGs, regardless of the amount of group loan, shall report the non-credit information to banks through the SHG Group at the time when the SHG approaches the bank for a loan.3 (iv) Subject to (iii) above, the credit information requirements for SHG members having a share above Rs.30,000 or more in the SHG loan is more detailed than that in respect of those upto Rs.30,000. The difference will be reduced, though not totally eliminated, as some more details are added to the latter in Phase II. (v) The non-credit information requirements have been designed both from the perspective of identification of the individual borrowers and supplementing the information requirements of banks, regulatory and government development agencies for the purpose of evaluating the flow of credit to various sub-segments of the SHG members and designing suitable credit penetration strategies keeping in view the socio-economic profile of the sub-segments. The information shall be reported by banks to the CICs in a manner that allows the CICs to identify all members associated with a particular SHG and a particular person to be identified with all SHGs with whom he/she is/was associated. 6. Banks shall put in place necessary systems and procedures including making necessary changes to their system software so as to be able to begin collection of the relevant information from the SHG members and reporting the required information to the CICs from 1 July 2016 ( Phase I) and 1 July 2017 (Phase II). 7. Banks have the option to collect and report the SHG member level data either themselves or by outsourcing it to other entities. However, banks shall follow all general instructions on outsourcing set out in DBR circular No.BP.40/21.04.158/2006-07 dated November 3, 2006 as amended from time to time to the extent applicable and shall continue to be responsible for the correctness of the data submitted by the outsourced agencies to the CICs. Banks must put in place appropriate controls to ensure the correctness of the data submitted by the entities to which it is outsourced. 8. Banks shall immediately start monitoring the NPA levels in the SHG segment on an ongoing basis, if not being already done, and collect detailed information from SHG members availing of loans exceeding a lower threshold of Rs.20,000, if the gross NPA in the SHG segment exceeds 10% or is higher than the total gross NPA of the bank by 5 percentage points. 9. Non-adherence to the above instructions by banks shall result in exclusion of non-compliant SHG loan accounts from the loan portfolios eligible to be reckoned for the purpose of complying with the Priority Sector Loan (PSL) targets. The determination with regard to loans qualifying for PSL benefit would be made at the4 end of each phase, based on a review of the compliance with the credit and non- credit information requirements as applicable to that phase. III. Other operational instructions 10. At this stage, it is envisaged to capture details of only the credit facilities availed of by the SHG member from the banks and MFIs. Therefore, any information relating to inter-loaning among the SHG members out of their own savings will not be covered. However, in order to know the overall indebtedness of a SHG member it may be necessary to know their exposures to the SHGs with regard to inter-loaning as well. As part of the continued endeavour to improve the quality of information of a SHG member, the need for capturing the inter-loaning would be reviewed after stabilisation of Phase II. 11. Given significant challenges in monitoring and reporting the performance of individual loans availed by the SHG members out of the amounts lent by banks to the SHGs, it is also not envisaged to extend the credit reporting system to the monitoring of repayment and recovery of these loans. However, this will also be considered after Phase II has taken ground. 12. With a view to building up the adequate information base of the potential SHG member borrowers, and expediting the process of collection and reporting of KYC compliant information relating to the members of the SHGs when the SHGs are credit-linked, banks are encouraged to offer Small Accounts/ Basic Savings Bank Deposit Account to the SHG members when an SHG approaches them for opening its Savings Account. In cases where the SHG members agree to open such accounts, the information in Table 4 may be collected and kept on record to be used at the time when the SHG approaches the bank for a loan. However, it must not be made a pre-condition for opening the Savings Account of the SHG. 13. None of the data requirements specified in this circular should be made a pre- condition for extending loans to the SHGs, though banks must make sincere efforts to comply with these requirements. 14. Banks may encourage the SHGs to keep written records of loans distributed to their members out of the bank loan including the digitization scheme for SHGs of NABARD, where applicable, and may consider introducing appropriate incentives in this regard.5 15. Banks shall develop appropriate policies to deal with applications for credit facilities from members of SHGs/SHGs on whom default is reported by the CICs. Care needs to be taken that the SHGs/individual members are not denied loans merely because of such defaults and banks should appropriately evaluate the credit history of the members themselves and take into account the economic viability of their activity/ies and the Groups’ capacity to service the loan proposed to be taken by considering their loan applications. 16. The credit information relating to individual SHG members shall be collected, reported and disseminated as per the provisions of the Credit Information Companies (Regulations) Act, 2005 and the extant RBI directions on credit information reporting by banks and MFIs. IV. Specific instructions to the CICs 17. The CICs shall make the necessary changes in their systems and procedures to implement the above directions as per the timelines indicated above. 18. CICs shall formulate appropriate policies with the approval of their Boards to share the credit information relating to SHGs or SHG members, on an aggregate basis with the Government agencies, NABARD, banks and MFIs for the purpose of credit planning and research. In accordance with their board approved policies, the CICs could also share the aggregate information with other parties for the purpose of undertaking research that could potentially benefit the SHG segment. The aggregate information shall be shared in a manner that is non-discriminatory and respects the confidentiality of the individual SHG groups and the SHG members as per the relevant laws of the country. Yours faithfully (Rajinder Kumar) Chief General Manager6 1 Annex I. Information to be collected by banks Table 1: Information to be collected from individual SHG members where the total amount of loan to be attributed to or to be availed by the SHG member exceeds Rs. 30, 0002 Particulars required Particulars Basis Modifications provided during Phase II I. Non-Credit information 1. Name of the SHG To be provided by the SHG member 2. Savings Bank Account To be provided by Number of the SHG the SHG member 3. Loan Account Number To be assigned by of the SHG the bank 4. Name of the SHG As it appears on the member identity document accepted by the bank or record of the bank 5. The identity document Aadhaar Card No. accepted by the bank /Voter ID/PAN /Driving licence/ NREGA Card /Passport3 6. Unique number of the Documentary proof identity document needed accepted by the bank, if available 7. Father’s /Husband’s As mentioned in the Name identity document accepted by the bank 8. Male or Female As declared by the SHG member 9. Date of birth (if printed DD/MM/YYYY on the identity document) 10. Address (Complete Declaration basis4 address with State Code and PIN Code) 11. Information about other Declaration basis existing bank accounts 1 The forms set out in this annex are meant to indicate the information requirements and could be digitized in any format, subject to all the particulars and details indicated herein being collected. 2 To be collected at the time of sanctioning a loan to new SHGs or at the time of renewal of existing loans or granting additional loans to the existing SHGs. With the approval of their boards, the banks with Gross NPA ratio exceeding 10% in the SHG loan segment may fix a lower threshold for collecting the information/data indicated in this Table and the next one. This amount will not include any subsidy or margin out of the member’s own savings that goes towards funding the activity or the purpose for which the loan is taken (both either back end or front end) 3 The banks may specifically see if any of the SHG members would fall within the purview of DBR circular DBR. AML.BC.No.15/14.01.001/2015-16 dated 1 July 2015 relating to introduction of simplified measures for proof of identity by RBI and offer Small Deposit Accounts/Basic Saving Bank Deposit Account to them. Wherever a SHG member is willing to open such an account, the KYC should be done as per RBI circular and reported to the Central KYC Registry and the CICs. No document to be collected if the KYC has already been done at the time of opening of the Savings bank Account of the SHG member, or otherwise. 4 The bank to pull out information from Central KYC registry as and when that is set up.7 12. Educational level Codes to be used Declaration basis Illiterate : 1 Passed 5th class : 2 Passed 8th class : 3 Passed 10th class : 4 Above 10th : 5 13. Occupation Codes to be used Declaration basis Home maker : 1 Landless labourer : 2 Marginal Farmer : 3 Small Farmer : 4 14. Annual income in Declaration basis thousands of Rs. 15. Social strata Codes to be used Declaration basis SC: 1 ST: 2 OBC: 3 General : 4 16. Mobile Number (if Declaration basis available)8 II. Credit related information5 17. Information about Based on the CIC existing loans – report obtained by the through other SHGs bank or a bank report where the individual (in the absence of a is a member CIC report) 17.1 Status of the SHG Based on the CIC Account report obtained by the ☐ Name of the SHG bank, if available ☐ SHG’s loan Account Number ☐ Name of the lending bank ☐ Amount borrowed ☐ Amount outstanding ☐ Status of the account ☐ Regular ☐ Defaulter ☐ Settled ☐ Sub-judice 17.2 If in default, In phase I, the status of the SHG status of the member’s loan account SHG member’s if the SHG loan was loan account distributed to him/her6 is to be enquired • Name of the only if the SHG SHG account was in • Name of the default. lending bank • Amount In Phase II, the borrowed status of the • Amount SHG member’s outstanding loan account to be enquired if the SHG loan was distributed to him/her regardless of the status of SHG loan account [Based on CIC report, if available; in other cases a letter from the SHG to be relied upon] 5 Not applicable, if the group loan is upto Rs. 1, 00, 000/-. 6 Until the data base of individual SHG members is accumulated in the CICs, this information may be collected and relied upon based on a letter provided by the SHG concerned. 17.2 will not be applicable if the SHG account is regular.9 18. The amount of loan Letter from the proposed to be taken President/Secretary of out of the group loan the SHG. To be verified granted by the bank by the bank later on. to the SHG7 19. The loans taken by During Phase I, this During Phase II, the member in information may be this information individual capacity collected based on CIC may be collected from other sources reports, if available. on a more firm basis i.e., if not available with CICs, individual bank/MFIs’ reports may be sought once the member declares his previous borrowings. 7 All SHGs must decide upfront how they propose to utilize the SHG loan. The actual distribution of the loan to individual members wherever it was agreed to be above Rs. 30,000 or where the actual amount disbursed exceeded Rs.30000 though not agreed at the time of taking loan from the bank, must be reported to the bank by the SHG office bearers. Non-adherence to this condition may be taken into account while extending further loan to the SHG or renewing its cash credit limit next time. The banks need to incorporate suitable clauses in the loan agreements relating to penal provisions for providing wrong information regarding the amount of loans taken out of the group loans. Depending upon their experience, banks may also insist on maintenance of verifiable record of the amounts distributed out of bank loans in cases where the average amount of loan availed by the SHG per member exceeds Rs.20,000/-.10 Table 2: Information to be collected from individual SHG members where the total amount of loan to be attributed to or to be availed by the SHG member is upto Rs.30,0008 Particulars required Particulars Basis Modifications provided during Phase II I. Non-Credit information 1. Name of the SHG To be provided by the SHG member 2. Savings Bank To be provided by Account Number of the SHG member the SHG 3. Loan Account To be assigned by Number of the SHG the bank 4. Name of the SHG As it appears on member the identity document accepted by the bank or record of the bank 5. The identity Aadhaar Card document accepted No. /Voter by the bank ID/PAN/Driving licence/NREGA Card /Passport9 6. Unique number of the Documentary identity document proof needed accepted by the bank, if available 7. Father’s /Husband’s As mentioned in Name the identity document accepted by the bank 8. Male or Female As declared by the SHG member 9. Date of birth (if DD/MM/YYYY printed on the identity document) 10. Address (Complete Declaration address with State basis10 Code and PIN Code) 11. Information about Declaration basis other existing bank accounts 8 To be collected at the time of sanctioning a loan to new SHGs or at the time of renewal of existing loans or granting additional loans to the existing SHGs. With the approval of their boards, the banks with Gross NPA ratio exceeding 10% in the SHG loan segment may fix a lower threshold for collecting the information/data indicated in this Table . This amount will not include any subsidy or margin out of the member’s own savings that goes towards funding the activity or the purpose for which the loan is taken (both either back end or front end) 9 The banks may specifically see if any of the SHG members would fall within the purview of DBR circular DBR. AML.BC.No.15/14.01.001/2015-16 dated 1 July 2015 relating to introduction of simplified measures for proof of identity by RBI and offer Small Deposit Accounts/Basic Saving Bank Deposit Account to them. Wherever a SHG member is willing to open such an account, the KYC should be done as per RBI circular and reported to the Central KYC Registry and the CICs. No document to be collected if the KYC has already been done at the time of opening of the Savings bank Account of the SHG member, or otherwise. 10 The bank to pull out information from Central KYC registry as and when that is set up.11 12. Educational level Codes to be used Declaration basis Illiterate : 1 Passed 5th Class : 2 Passed 8th Class : 3 Passed 10th class : 4 Above 10th : 5 13. Occupation Codes to be used Declaration basis Home maker : 1 Landless Labourer : 2 Marginal farmer : 3 Small Farmer : 4 14. Annual income in Declaration basis thousands of Rs. 15. Social strata Codes to be used Declaration basis SC : 1 ST : 2 OBC : 3 General : 4 16. Mobile Number (if Declaration basis available) II. Credit related information11 17. Information about Not to be collected Based on the To be collected existing loans – during phase I CIC report only during through other SHGs obtained by the Phase II based where the individual bank or a bank on the CIC is a member report (in the report obtained absence of a by the bank. 17.1 Status of the SHG CIC report) Account ☐ Name of the SHG ☐ SHG loan account number ☐ Name of the lending bank ☐ Amount borrowed ☐ Amount outstanding Based on the CIC ☐ Status of the account report obtained by ☐ Regular the bank, if ☐ Defaulter available ☐ Settled ☐ Sub-judice 11 Not applicable, if the group loan is upto Rs. 1, 00, 000/-.12 18. The loans taken by Not to be collected To be collected the member in during phase I during Phase II; individual capacity based on CIC from other sources report if available 19. The amount of loan During phase I: During Phase II: proposed to be taken The amount to be The amount of out of the group loan recorded based loan to be granted by the bank on a letter from verified by the to the SHG the bank from the President/Secretar SHG records. y of the SHG13 II. Information to be uploaded/submitted to the CICs Table 312: Information on all individual SHG members to be reported by banks to CICs I. Non- credit related information Modifications during Phase II 1. Name (as it appears on the identity document) 2. The nature of the identity document accepted by the bank 3. Unique number of the identity document accepted by the bank, if available 4. Date of birth (DD/MM/YYYY) 5. Father’s /Husband’s Name 6. Address (Complete address with State Code and PIN Code) 7. Male or Female 8. Name of the SHG of which the person is a member 9. Savings Account Number of the SHG 10. Loan Account Number of the SHG 11. Reference number of any other identity document that has been relied upon by the bank 12. Educational level of the SHG Codes to be used member Illiterate : 1 Passed 5th class : 2 Passed 8th class : 3 Passed 10th class : 4 Above 10th : 5 13. Annual Income Codes to be used Home maker : 1 Landless labourer : 2 Marginal farmer : 3 Small Farmer : 4 14. Occupation 15. Social strata Codes to be used SC : 1 ST : 2 OBC : 3 General : 4 16. Mobile No. II. Credit related information13 17. Amount of loan availed by the The amount of loan member from the SHG loan if it availed by the member exceeds Rs.30,000. from the SHG loan regardless of the amount. 12 RBI has set up a Standing Technical Working Group comprising representatives from various credit institutions and CICs to institutionalise a continuing mechanism for reviewing and making changes where necessary to the data formats. This Group shall suitably adapt Table 3 for the purpose of reporting of data by banks to the CICs electronically. 13 Not applicable, if the group loan is upto Rs. 1, 00, 000/-.14 Table 4: Information on individual SHG members to be collected at the time of opening of new SHG Savings Bank Accounts of the SHG Particulars required Particulars provided Basis 1. Name of the SHG To be filled in by the SHG member 2. Savings Bank Account Number of To be assigned by the the SHG bank 3. Name of the SHG member As it appears on the identity document accepted by the bank 4. The identity document accepted Aadhaar Card No. by the bank /Voter ID/PAN/Driving licence/NREGA Card /Passport14 5. Unique number of the identity Documentary proof document accepted by the bank, if needed available 6. Father’s /Husband’s Name As mentioned in the identity document accepted by the bank 7. Male or Female As declared by the SHG member 8. Date of birth (if printed on the DD/MM/YYYY identity document) 9. Address (Complete address with Declaration basis15 State Code and PIN Code) 10. Information about other existing Declaration basis bank accounts 11. Educational level Codes to be used Declaration basis Illiterate : 1 Passed 5th class : 2 Passed 8th class : 3 Passed 10thclass : 4 Above 10th : 5 12. Occupation Codes to be used Declaration basis Home maker : 1 Landless Labourer : 2 Marginal Farmer : 3 Small Farmer : 4 14 The banks may specifically see if any of the SHG members would fall within the purview of DBR circular DBR. AML.BC.No.15/14.01.001/2015-16 dated 1 July 2015 relating to introduction of simplified measures for proof of identity by RBI and offer Small Deposit Accounts/Basic Saving Bank Deposit Account to them. Wherever a SHG member is willing to open such an account, the KYC should be done as per RBI circular and reported to the Central KYC Registry and the CICs. 15 The banks will pull out information from Central KYC registry as and when that is set up.15 13. Annual income in thousands of Rs. Declaration basis 14. Social strata Codes to be used Declaration basis SC : 1 ST : 2 OBC : 3 General : 4 15. Mobile Number (if available) Declaration basis