Joint Liability Group (JLG)

JLG serves as an important tool for augmenting flow of credit to landless farmers cultivating land as tenant farmers, oral lessees, share croppers and small/marginal farmers and other individuals for taking up farm, off farm and non-farm activities.

General features of JLG:

A Joint Liability Group (JLG) is an informal group comprising preferably of 4 to 10 individuals coming together for the purpose of availing bank loan either singly or through the group mechanism against mutual guarantee. The JLG members would offer a joint undertaking to the bank that enables them to avail loans. The JLG members are expected to engage in similar type of economic activities like crop production, non-farm activity etc. The management of the JLG is to be kept simple with little or no financial administration within the group.

The Joint Liability Group enables the members to avail credit without collateral, purely on the strength of peer partnership and at the same time gives them flexibility to pursue individual dreams.

Objectives for introduction of the product:

  • To augment flow of credit to landless farmers cultivating land as tenant farmers, oral lessees or share croppers and small/ marginal farmers as well as other poor individuals taking up farm activities, off-farm activities and non-farm activities.
  • To serve as collateral substitute for loans to be provided to the target group.
  • To minimize the risks in the loan portfolio for the banks through group approach.
  • To reduce transaction cost to the banks by substituting individual lending with group lending and also conventional collateral with social collateral/ peer pressure.
  • To enhance agricultural production/ productivity and livelihood promotion through JLG mechanism.

Criteria for selection of JLG members:

  • Members should belong to similar socio-economic status, be likeminded and agree to function as a joint liability group.
  • The members should be residing in the same village/ area /neighborhood and should know and trust each other.
  • The group members should not be a defaulter to any other formal financial institution.
  • More than one person from the same family should not be included in the JLG

* For more details , contact your nearest Branch of JKGB.