Introduction
The National Bank for Agriculture and Rural Development promotes the Joint Liability Group (JLG) Scheme as an important tool for extending institutional credit to small and marginal farmers, tenant farmers, sharecroppers, oral lessees, and other rural borrowers who often face difficulties in accessing formal bank finance.
The scheme aims to improve financial inclusion in rural areas by enabling borrowers without collateral or clear land ownership documents to obtain loans from banks through a group-based lending approach.
NABARD’s Support for JLG Formation
NABARD actively supports the formation and development of Joint Liability Groups across India through its regional and district-level offices. The JLG scheme is generally implemented in a project mode, where groups are formed, nurtured, and linked with banks for obtaining microcredit and other financial services.
The objective is to create sustainable credit linkages between rural borrowers and formal financial institutions, thereby reducing dependence on informal moneylenders.
Implementation Through Promoting Institutions
NABARD does not directly form JLGs. Instead, it works through various JLG Promoting Institutions (JLPIs) that help organize and support the groups.
These promoting institutions include:
- Non-Governmental Organizations (NGOs)
- Farmers’ Clubs
- Farmers’ Federations
- Cooperative Societies
- Business Correspondents
- Panchayati Raj Institutions
- Microfinance Institutions
- Other suitable community-based organizations
These organizations identify eligible members, facilitate group formation, provide awareness and training, and help establish credit linkages with banks.
Objective of the Scheme
The main objectives of NABARD’s JLG Scheme are:
- To provide collateral-free institutional credit to rural borrowers.
- To increase access to formal banking services.
- To reduce dependence on informal credit sources.
- To promote agricultural and allied activities.
- To improve rural livelihoods and income generation.
- To strengthen financial inclusion in rural areas.
- To encourage credit discipline through joint responsibility.
Project-Based Approach
Under the project-based approach, NABARD encourages the systematic formation and nurturing of JLGs. The process generally includes:
- Identification of eligible borrowers.
- Formation of Joint Liability Groups.
- Training and awareness programs.
- Opening bank accounts where required.
- Credit linkage with banks.
- Monitoring and follow-up support.
- Capacity building of members and promoting institutions.
This structured approach helps improve the sustainability and effectiveness of JLGs.
NABARD Publications and Success Stories
To encourage wider adoption of the JLG model, NABARD has documented and published several success stories highlighting the achievements of Joint Liability Groups in different parts of India.
These case studies demonstrate how JLGs have helped:
- Improve access to credit.
- Increase agricultural productivity.
- Promote dairy, fisheries, and livestock activities.
- Generate rural employment.
- Enhance household incomes.
- Reduce dependence on moneylenders.
NABARD has published a dedicated booklet containing these success stories, which is available through its official resources and serves as a useful reference for banks, promoting institutions, policymakers, and rural borrowers.
Benefits of NABARD’s JLG Scheme
| Benefit | Description |
|---|---|
| Collateral-Free Credit | Members can access bank loans without providing security. |
| Financial Inclusion | Rural borrowers become part of the formal banking system. |
| Reduced Dependence on Moneylenders | Access to institutional finance lowers reliance on informal lenders. |
| Group Accountability | Joint liability promotes repayment discipline. |
| Support for Agriculture | Facilitates credit for farming and allied activities. |
| Livelihood Enhancement | Helps increase income and employment opportunities. |
Conclusion
NABARD’s Joint Liability Group Scheme is an important initiative for expanding rural credit and financial inclusion in India. By supporting the formation of JLGs through NGOs, Farmers’ Clubs, and other promoting institutions, NABARD helps small and marginal farmers gain access to formal banking services without collateral. The scheme has contributed significantly to rural development, agricultural growth, and livelihood improvement, making JLGs an effective mechanism for delivering institutional credit to underserved sections of society.