JOINT LIABILITY GROUP (JLG)

JLG is an informal group comprising of 4 to 10 members. The JLG is primarily a credit group and savings
by the JLG members is voluntary. The members of JLG can avail bank loan either singly or through group
mechanism. Each member will be jointly and severally liable for repayment of loans taken by all
individuals in the group. There has to be mutual agreement and consensus among all members about the
amount of individual debt liability that would be created. The main objective of formation and financing Joint
Liability Groups (JLGs) is to augment flow of credit to tenant farmers cultivating land either as oral lessees or
sharecroppers and small farmers, who do not have proper title to their land holding. Collateral free loans
are extended to target clients through JLG mechanism. Mutual trust and confidence is built between banks
and tenant farmers and among group members.
Financing of JLGs is taken up by adopting any of the two models. Grading of the group is done based on
performance parameters/ individual members credentials. Model A: Maximum Rs.1 lakh per individual
member under both A & B models. Model B: Maximum Rs.5 lakh per JLG for crop production in the form
of SKCC and maximum Rs. 10 lakh per JLG for other Agriculture Term loans and allied activities.
Purposes can be Agriculture and Allied activities as per the Micro Credit Plan of the group either as short
term loan in the form SKCC or Term loan for productive purposes.