A Joint Liability Group (JLG) is a small group of 4 to 10 individuals, usually farmers, small business owners, or micro-entrepreneurs, who come together to avail loans from financial institutions without providing collateral. The group members mutually agree to share the responsibility of repaying the loan if any member defaults.
Key Features of a JLG:
- Mutual Guarantee: All members share the liability for repaying the loan.
- No Collateral Required: Loans are given based on the creditworthiness and trust among the members.
- Target Audience: Typically designed for farmers, rural entrepreneurs, and small business owners.
- Group Size: Usually 4 to 10 members.
- Purpose of Loan: Used for agriculture, allied activities, or small business development.
- Lower Interest Rates: Since repayment is collectively assured, banks offer better loan terms.
Advantages of JLGs:
✅ Easy access to credit for individuals with low or no credit history.
✅ Encourages financial discipline and responsibility among group members.
✅ Boosts financial inclusion for rural and small-scale entrepreneurs.
✅ Helps in improving agricultural productivity and rural development.
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