SHG Loans Under DAY-NRLM: Eligibility and How to Apply
Reviewed by: WeCredit Research Team
Women self-help groups (SHGs) under DAY-NRLM can borrow from banks without collateral up to Rs. 20 lakh per group, and loans up to Rs. 3 lakh carry a concessional 7% interest rate under the interest subvention scheme. The group applies to a bank branch, with help from DAY-NRLM mission staff and the Bank Sakhi who prepare the list of eligible SHGs.
Quick answer: an SHG loan is a group loan from a bank, not a payment from the government. The mission builds and trains the group, and the bank decides the loan. WeCredit does not sanction government scheme loans. Confirm current terms with your bank and on the Lakhpati Didi portal before you apply.
DAY-NRLM SHG Loans at a Glance
| Item | What the official sources say |
|---|---|
| Scheme | Deendayal Antyodaya Yojana, National Rural Livelihoods Mission (DAY-NRLM), a centrally sponsored scheme of the Ministry of Rural Development run with States and UTs (except Chandigarh and Delhi) |
| Who it is for | Women SHGs promoted under DAY-NRLM. Each group has 10 to 20 members |
| Collateral | None. Collateral-free loans up to Rs. 20 lakh per SHG |
| Interest rate | Up to Rs. 3 lakh at 7% a year under the interest subvention scheme for women SHGs in rural areas |
| Minimum cash credit limit | Rs. 6 lakh to each eligible SHG for 3 years, per RBI’s master circular of 20 July 2022 |
| Community Investment Fund | Up to Rs. 2.50 lakh per SHG, paid to the cluster-level federation or village organisation |
| Revolving Fund | Corpus of Rs. 10,000 to Rs. 15,000 per SHG |
| Where to apply | Your SHG’s bank branch, with mission staff and the Bank Sakhi helping |
| Scale | 10.05 crore rural households organised into 90.90 lakh SHGs (Lok Sabha reply, 22 July 2025) |
| Status | Active |
DAY-NRLM does not lend money itself. It organises rural women into SHGs, supports them with funds such as the Revolving Fund and the Community Investment Fund, and connects the group to banks. The loan comes from a bank, and the bank takes the lending decision under the rules RBI has set for SHG lending. For other schemes, see our government loan schemes hub.
Who Is Eligible
Two sets of conditions apply: the group must be a DAY-NRLM women SHG, and it must pass the bank’s checks. RBI’s master circular on DAY-NRLM sets these tests for SHG bank loans:
- The SHG must be in active existence for at least 6 months, as shown in its books of accounts.
- The group must practise the Panchasutras.
- The group must qualify under the grading norms fixed by NABARD.
- Women SHGs under DAY-NRLM have 10 to 20 members.
- The interest subvention applies only to women SHGs under DAY-NRLM in rural areas, and it is paid only while the loan account stays in the standard category.
The Revolving Fund has its own condition. It goes to groups that have been in existence for a minimum period of 3 to 6 months and have not received a Revolving Fund before.
How Much Can an SHG Borrow
RBI’s instructions to banks describe a ladder of loans. A group starts small, repays on time, and moves up to larger doses of credit.
| Loan stage | Amount banks are advised to consider | Repayment period |
|---|---|---|
| Cash credit limit | Minimum Rs. 6 lakh to each eligible SHG for 3 years | 3 years |
| Term loan, first dose | 6 times the SHG’s corpus or a minimum of Rs. 1.5 lakh | 24 to 36 months |
| Term loan, second dose | 8 times the corpus or a minimum of Rs. 3 lakh | 36 to 48 months |
| Term loan, third dose | Minimum Rs. 6 lakh | 48 to 60 months |
| Term loan, fourth dose onwards | Above Rs. 6 lakh | 60 to 84 months |
On collateral, RBI’s circular says that for SHG loans up to Rs. 10 lakh no collateral and no margin is taken. For loans above Rs. 10 lakh and up to Rs. 20 lakh, no collateral should be taken, though a margin of up to 10% of the amount above Rs. 10 lakh may apply. The Lakhpati Didi portal summarises this as collateral-free loans up to Rs. 20 lakh per SHG.
On price, the portal lists interest subvention for loans up to Rs. 3 lakh at a 7% rate of interest. RBI’s master circular set the same 7% rate for women SHGs under DAY-NRLM in rural areas in its 2022-23 instructions, so confirm the rate that applies to your loan year with the bank. For loans above that limit, ask the bank which rate applies and get it in writing. A woman member can also look at a Mudra Kishor loan, because RBI says one woman in every DAY-NRLM SHG may be given a loan up to Rs. 1 lakh under the Mudra scheme.
Worked Example: A New SHG Taking Its First Term Loan
Take a 10-member SHG with Rs. 50,000 in its corpus. Six times the corpus is Rs. 3 lakh, which is above the Rs. 1.5 lakh minimum for a first dose. The figures below assume a Rs. 3 lakh loan at 7% a year repaid over 36 months, which is the top of the 24 to 36 month range RBI gives for a first dose. The bank sets the final amount and schedule.
| Item | Amount |
|---|---|
| Loan amount | Rs. 3,00,000 |
| Interest rate (assumed) | 7% a year |
| Repayment period (assumed) | 36 months |
| Monthly instalment for the group | About Rs. 9,263 |
| Share per member (10 members) | About Rs. 926 a month |
| Total interest over 36 months | About Rs. 33,473 |
If the group repays on time, it builds the record the bank looks at when it considers the second dose, which RBI places at 8 times the corpus or a minimum of Rs. 3 lakh.
Other Funds and Credit Linked to DAY-NRLM
- Revolving Fund: RBI and the Ministry of Rural Development explainer both put the corpus at Rs. 10,000 to Rs. 15,000 per SHG. The Lakhpati Didi portal says the average size is Rs. 20,000 to Rs. 30,000. Ask your Block Mission office which figure your group received.
- Community Investment Fund: up to Rs. 2.50 lakh per SHG, given to the cluster-level federation (or village organisation where no federation exists) rather than to the group directly.
- Women Enterprise Acceleration Fund: a credit guarantee for loans up to Rs. 5 lakh for a maximum of 5 years, and interest subvention for loans up to Rs. 1.5 lakh for a maximum of 3 years.
- Loans to individual members: banks may lend up to Rs. 10 lakh to individual members of select matured SHGs. The group should be more than 2 years old and must have repaid at least one bank loan dose on time.
- Overdraft: banks are advised to give a minimum overdraft of Rs. 5,000 to every woman SHG member who has a PMJDY account.
Documents to Prepare
Ask your bank branch for its document list before you apply. It helps to keep these ready:
- Identity and address proof of each member
- The SHG’s savings bank account passbook or statement
- The SHG’s books of accounts, since the 6-month rule is checked against them
- Meeting and savings records that show the group follows the Panchasutras
- The NABARD grading or the mission’s assessment of the group, if the bank asks for it
- The SHG’s resolution to borrow, signed by members
How to Get an SHG Bank Loan: Step by Step
- Check that your group is a DAY-NRLM women SHG with at least 6 months of books and regular meetings.
- Meet the DAY-NRLM mission staff and the Bank Sakhi. They prepare the list of eligible SHGs for linkage and help groups submit applications.
- Approach the bank branch where the SHG savings account is held.
- Fill in the Common Loan Application Form devised by the Indian Banks’ Association. RBI also encourages banks to accept SHG applications online through the system developed by DAY-NRLM and the National Portal for Credit Linked Schemes.
- The bank appraises the group, then sanctions a cash credit limit or a term loan dose.
- Read the sanction letter for the amount, interest rate, repayment schedule and confirmation that no collateral is taken.
- Repay on schedule. The interest subvention is paid only while the loan account remains in the standard category.
Issues with SHG linkage at the block level are taken up by the Block Level Bankers’ Committee, so ask your Block Mission office to raise a delay there. For online applications on a national credit portal, see our JanSamarth portal registration steps.
Lakhpati Didi: How It Connects to SHG Loans
Lakhpati Didi is a goal for individual SHG women, not a loan product. The Ministry defines a Lakhpati Didi as a woman who earns a minimum income of Rs. 1 lakh a year on a sustainable basis, with an average monthly income of at least Rs. 10,000 sustained for at least four agricultural seasons or business cycles. The initiative focuses on the individual SHG woman, not on the SHG. As of 22 July 2025, 1,48,32,258 SHG women had become Lakhpati Didis, as reported to the Ministry.
Where SHG Loan Applications Stall
| Problem | Official rule behind it | What to do |
|---|---|---|
| Group is new | The SHG must be in active existence for at least 6 months | Keep books and meetings regular, then apply |
| Panchasutras not followed | Groups must practise the Panchasutras | Ask the mission staff which practices are missing, fix them and keep records |
| Grading not met | The SHG must qualify under NABARD grading norms | Ask the mission staff to help the group improve the weak areas |
| Loan account turns irregular | Interest subvention is paid only while the account is in the standard category | Repay each instalment on time |
| Individual member loan refused | The SHG must be over 2 years old with at least one dose repaid on time | Build the repayment record before applying |
| Group is not a women SHG in a rural area | The subvention scheme is limited to women SHGs under DAY-NRLM in rural areas | Check the group’s DAY-NRLM registration with the Block Mission office |
Related Credit Options for SHG Members
| Route | Who borrows | Limit |
|---|---|---|
| SHG bank loan (cash credit or term loan) | The SHG as a group | Collateral-free up to Rs. 20 lakh; interest subvention up to Rs. 3 lakh at 7% |
| Loan to an individual member of a matured SHG | One member | Up to Rs. 10 lakh |
| Mudra loan through an SHG | One woman in each SHG | Up to Rs. 1 lakh |
| Women Enterprise Acceleration Fund | SHG women with enterprises | Credit guarantee up to Rs. 5 lakh; interest subvention up to Rs. 1.5 lakh |
| PMJDY overdraft | A woman SHG member with a PMJDY account | Minimum Rs. 5,000 |
Is This Route Right for Your Group
- Is your group a DAY-NRLM women SHG with 10 to 20 members?
- Has it been active for at least 6 months, with books of accounts to show it?
- Does it follow the Panchasutras and meet the NABARD grading norms?
- Can members repay an instalment such as Rs. 926 a month each on a Rs. 3 lakh loan?
- Do you need a group loan for several members’ activities, rather than one member’s business?
If you answered yes to most of these, speak to your Block Mission office and to the bank branch that holds the group’s account.
Common Mistakes
- Treating the Revolving Fund or Community Investment Fund as the bank loan. They are separate from the bank loan.
- Applying before the group has 6 months of books.
- Missing instalments, which can end the interest subvention.
- Assuming a loan up to Rs. 20 lakh is automatic. The bank still appraises the group and decides the amount.
Frequently Asked Questions
Who can get an SHG loan under DAY-NRLM?
A women SHG promoted under DAY-NRLM that has been active for at least 6 months, practises the Panchasutras and meets NABARD grading norms. The interest subvention applies to women SHGs in rural areas.
How much loan can an SHG get without collateral?
Collateral-free loans up to Rs. 20 lakh per SHG, according to the Lakhpati Didi portal. RBI’s circular says no collateral and no margin up to Rs. 10 lakh, and no collateral from Rs. 10 lakh to Rs. 20 lakh.
What is the interest rate on SHG loans?
The Lakhpati Didi portal lists interest subvention for loans up to Rs. 3 lakh at a 7% rate of interest. For larger loans, ask the bank which rate applies and get it in writing.
What are the Revolving Fund and the Community Investment Fund?
The Revolving Fund is a corpus given to a new SHG, put at Rs. 10,000 to Rs. 15,000 by RBI and the Ministry of Rural Development. The Community Investment Fund is up to Rs. 2.50 lakh per SHG, paid to the cluster-level federation.
Can an individual SHG member get a loan?
Yes, in some cases. Banks may lend up to Rs. 10 lakh to individual members of select matured SHGs that are more than 2 years old and have repaid at least one bank loan dose on time.
What is a Lakhpati Didi?
An SHG woman who earns at least Rs. 1 lakh a year on a sustainable basis, with an average of at least Rs. 10,000 a month for four agricultural seasons or business cycles.
Does WeCredit sanction SHG loans?
No. WeCredit does not sanction government scheme loans. We explain how schemes work. Confirm current terms with your bank, the Block Mission office and the official sources below.
