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A Joint Liability Group (JLG) loan is a type of loan where a group of 4-10 individuals, often from similar socio-economic backgrounds, come together to obtain a loan from a bank. The group members are jointly liable for the loan, meaning they guarantee each other's repayment. This model allows individuals to access credit who might not qualify for loans individually, especially those lacking traditional collateral.
JLGs are informal groups of individuals, typically with similar livelihoods or economic activities. All members of the JLG are jointly responsible for the loan repayment. If one member defaults, the other members are responsible for covering the debt.
JLGs provide access to credit for individuals who might not be able to secure loans individually, especially those who lack collateral or have a poor credit history. The joint liability aspect of JLG loans reduces the risk for lenders, as the group acts as a form of social collateral.
JLGs make it easier for individuals to access loans, as they can often receive loans without traditional collateral. The joint liability aspect fosters mutual support and responsibility among group members, encouraging timely repayment.JLG loans can empower individuals, especially women, to start or expand businesses and improve their livelihoods.
JLGs can empower women to start or expand businesses, particularly in rural areas. Other Small Business Owners: Individuals with limited collateral can use JLGs to obtain loans for small businesses.
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.
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Joint Liability Group (JLG) loans are designed to offer collateral-free credit access to small and marginal farmers, landless laborers, and rural entrepreneurs. By pooling individuals into a group that collectively guarantees repayment, JLG loans support agricultural investments, micro-business ventures, and other income-generating activities. This initiative plays a vital role in promoting financial inclusion and enhancing economic resilience within rural communities.
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