JLG or Joint Liability Group is a concept established in 2014 which consists of an informal group of 4 – 10 individuals (max 20) who are engaged in similar business/ occupation, formed with the purpose of availing loan through the group mechanism against mutual guarantee.
These groups are formed to augment flow of credit to farmers, especially small, Marginal, tenant farmers, oral lessees, share croppers / Individual taking up farm activities .
JLG members are expected to provide support to each other in carrying out occupational and social activities.
ELIGIBILITY CRITERIA TO BECOME A MEMBER
- Members should belong to similar socio-economic status and same village/area/neighborhood.
- More than one person from the same family should not be included in same JLG.
- Members who have defaulted to any other formal financial Institution, in the past, are debarred from the Group Membership.
WHO CAN FORM JLG’s ?
- These groups can be formed by Farmers Associations, Panchayat Raj Institutions (PRIs), Farmers’ Clubs, Krishi Vikas Kendras (KVKs), State Agriculture Universities (SAUs), Business Facilitators, NGOs, Agriculture Technology Management Agency (ATMA), Bank branches, PACS, Other Co-operatives, Government Departments, Individuals, Input dealers, MFIs / MFOs etc.
MODELS OF JOINT LIABILITY GROUP
Banks can finance JLGs by adopting any of the two models :-
Model A – Financing Individuals in the JLG –
Size: 4-10 individual’s
The group is eligible for accessing separate individual loans from the financing bank. In such an arrangement each group member is jointly and severally liable for repayment of all loans taken by all individuals in the group).
Model B – Financing the JLG as a Group –
The JLG functions, operationally as one borrowing unit in this model. The size of the group is preferably of 4-10 individuals but can go upto 20.
The group would be eligible for accessing one loan, which could be combined credit requirement of all its members. The credit assessment of the group could be based on the available cultivable area of each member of the JLG/ activity to be undertaken for farm sector, off-farm sector or non-farm sector.
Since loans are granted against the mutual guarantee offered by the group, maximum amount of loan is usually restricted to Rs. 50,000 per individual both under both the models.
Thus, in simple words a JLG is an Informal group in which 4 – 10 individuals come together to provide support to each other in carrying out occupational and social activities.