Joint Liability Group: All You Need To Know


Joint Liability Group consists of 4-10 individuals (having similar occupation) from the same village that form a group and this group of borrowers then take a loan from a micro-finance institution.

TYPES OF MEMBERS

  • Landless labourers
  • Farmer’s association
  • Small farmers
  • NGOs
  • KVK (krishi Vikas Kendras)
  • Panchayati Raj Institutions (PRI)
  • Artisans
  • Bank branches etc.

CHARACTERISTICS

  • No collateral
  • Group loan
  • Members should do a common business
  • Each member stand as a guarantee for every other member in the group
  • Like SHGs are for women mostly, JLGs are for men but a woman can also be its member
  • Each member monitors the other members of the group
  • It a member fails to give his share the others have to pay for him
  • The members of the group learn to handle finances with discipline
  • Meeting are held at regular intervals
  • Both Above Poverty Line(APL) and Below Poverty Line(BPL) benefit from this scheme
  • Peer pressure ensures every member in the group pays
  • Only one member of a family is allowed in a particular JLG
  • Group dynamics are used within the group 

PURPOSE

  • To provide self employment by providing financial assistance
  • Loans provided to poorer sections of society i.e landless labourers, small farmers, artisans etc.
  • Useful to farmers in the areas where average land holdings are decreasing, especially in Haryana and Punjab
  • Help build confidence in farmers and lowering of credit risk

MODELS

SEPARATE INDIVIDUAL LOANS – Separate loans are given by the bank and each group member has a shared liability that all the individual loans are paid on time. Maximum size is up to 10 members only.

A SINGLE GROUP LOAN- A combined credit loan is given according to the requirements of the group. Maximum size can go up to 20 members.

LOAN LIMIT

Rs. 50,000/- per individual in both the models mentioned above

NABARD – SCHEME OF JLGs

  • NABARD announced JLGs on 24 February 2014 based on the concept of SHGs
  • It provides refinance to the banks that give loans to JLGs

DIFFERENCE BETWEEN JLGs AND SHGs

  • JLGs focus on credit and SHGs focus on savings
  • JLGs have smaller groups(consisting mostly men) whereas SHGs have larger groups(consisting mostly women)
  • JLG members directly interact with financial institutions whereas SHGs have a more formal structure like there is a treasurer, secretary etc
  • SHGs were introduced before JLGs
  • JLGs put more money in the economy unlike SHGs which are only savings oriented
  • SHGs don’t help in poverty alleviation whereas JLGs does

LIMITATIONS

  • Sometimes a high rate of interest is charged and the group is unable to save for the business they are involved in
  • Sometimes the money lent is used for some other purpose other than the one for which it was sanctioned
  • Sometimes the maximum limit of members exceeds and it is difficult to manage such a large group of people

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