Joint Liability Group Loan - Full Form, Purpose, Benefits & Best Options

Understanding the Basics of Joint Liability Loans

Availability of loans to achieve your dream is easier than ever. Most lenders provide instant loans to those with a good credit score without collateral. A group of people, however, needs a loan to improve their economic standards but do not have access due to any credit score and proper information. These groups can comprise small farmers working on rented land, self-help groups and women who have a source of income and plan to increase their revenue.

To further strengthen their standing in the business world and extend the benefits to these unorganised groups, a Joint Liability Group (JLG) Loan was created to provide micro-loans. A JLG loan is designed for groups that want to grow their income by scaling but fail to do so, mainly due to a lack of funds or awareness. A JLG loan is given to less fortunate rural or semi-urban people who find it convenient to avail of a loan in a group of closely known people.

JLG Loan Full Form & Meaning

JLG full form stands for Joint Liability Group Loan, a financial product designed for individuals in rural and semi-urban areas. A joint liability group loan involves a group of individuals, typically with similar economic activities, who come together to borrow collectively. The group shares the responsibility of loan repayment, ensuring mutual accountability and access to credit for those with limited collateral or financial history.

Features of a JLG Loan

• Interest Rate: Starts from 24% onwards.
• Repayment Tenure: Flexible options ranging from 24 to 36 months.
• Loan Amount: Collateral-free loans from ₹ 35,000 to ₹ 1,10,000.
• Processing Fee: Minimum 1% of the loan amount, plus 18% GST.
• Target Audience: Primarily offered to women customers in rural and semi-urban areas.
• Collateral: Based on mutual guarantee, without requiring physical collateral.
• Purpose: Promotes accessibility to funds for sustainable economic growth and development.

• Offers a simple and hassle-free loan process.
• Requires no collateral or security submission.
• Provides mutual collateral, inspiring members to repay without defaulting.
• Ensures zero repayment bounce charges or late payment interest.
• Helps low-income groups achieve aspirations through accessible microloans.

• An informal group of 4–10 people engaged in similar economic activities.
• Members should be well-acquainted and live in close proximity.
• Applicable to Self-Help Groups (SHGs), small farmers, or women entrepreneurs.
• Group members should fall within the age range of 20–60 years.

• Income Proof: All applicants must determine the loan amount.
• Identity Proof: Aadhaar Card, Voter ID, or Ration Card.
• Additional Proof: MGNREGA Card (if applicable).

• Visit private, public, or NBFC lenders offering joint liability group loan options.
• Explore available JLG loan details online through official bank websites or NBFCs.
• Gather necessary documents like proof of income and identity.
• Submit an online or offline application after understanding the terms and conditions.

Now that you are familiar with a joint liability group loan (JLG), you should search for the best options to obtain one. While the Reserve Bank of India (RBI) regulates JLG loans, their terms and conditions vary from lender to lender.

While selecting the best option to avail of a JLG loan, always read the conditions like processing fees, repayment, pre-mature closure charges, late payment charges, JLG loan documents, etc. Considering the greater good achieved by a JLG loan, L&T Finance offers one of the best-in-class microloans. To know more exciting features of LTF JLG loan.

The realisation of every financial dream, no matter how big or small, relies on two things. One is the willpower of the dreamer and the second is the access to funds to achieve it. Often, representatives of the low-income group find it difficult to become financially independent and raise their standard of living instead of having easy access to loans. A joint liability group loan is a boon to groups with the plan to succeed. A little push in the form of available cash without any collateral is the key benefit of a joint liability group (JLG) loan in contributing to the uplifting standard of living for less fortunate people.

Frequently Asked Questions

1. What is a Joint Liability Group (JLG) loan?

A Joint Liability Group loan is a financial product designed for small groups, typically in rural or semi-urban areas, to collectively borrow money without collateral. The group members share the responsibility of repayment, fostering mutual accountability and financial empowerment.

2. Who can form a Joint Liability Group?

A Joint Liability Group can be formed by 4–10 individuals, often engaged in similar economic activities, such as farming or small businesses. Members should live nearby and have a mutual understanding to ensure trust and repayment.

3. What are the main benefits of a JLG loan?

• No collateral is required.
• Affordable access to funds for small businesses.
• Encourages financial discipline among group members.
• Zero bounce charges or late payment interest.
• Promotes economic growth in low-income communities.

4. What are the eligibility criteria for a JLG loan?

• Group of 4–10 individuals engaged in similar economic activities.
• Members must be between 20–60 years old.
• Individuals should belong to the same locality and have mutual trust.
• Income proof is required for all applicants.

5. How does the repayment process work in a JLG loan?

Repayment is shared among all group members and if one member defaults, others are collectively responsible for covering the amount. This mutual accountability ensures timely repayment and builds group solidarity.

6. Can a JLG loan be used for any purpose?

No, a JLG loan is typically granted for income-generating activities such as farming, small businesses, or entrepreneurial ventures. It cannot be used for personal or non-productive expenses.

7. What is the interest rate for a JLG loan?

The interest rate for a JLG loan generally starts from 24% per annum, depending on the lender and loan amount. The repayment tenure ranges from 24 to 36 months.