How NGOs Can Qualify for Rashtriya Mahila Kosh Funding for Women’s SHGs

Rashtriya Mahila Kosh (RMK), established in 1993 under India’s Ministry of Women and Child Development, was created with one clear purpose: put collateral-free microcredit into the hands of poor women in the unorganized sector. Rather than lending directly to individual borrowers, RMK works through a channel model – it funds NGOs and other intermediary microfinance organizations (IMOs), which then on-lend that money to women’s Self Help Groups (SHGs). For any NGO looking to tap into this pipeline and build financial access for women at the grassroots level, understanding exactly how to qualify is the essential first step.

What RMK does and why NGOs are central to it 🔗

RMK does not disburse loans directly to women beneficiaries. Instead, it operates as a facilitating agency, channeling funds through NGOs, voluntary organizations (VOs), and IMOs, which then extend credit to women’s SHGs and Joint Liability Groups (JLGs). This layered model means NGOs are not just fundraisers – they are active financial intermediaries accountable for on-lending, recovery, and group development.

The implication is significant. An NGO seeking RMK funding takes on a dual responsibility: developing and nurturing SHGs on one side, and maintaining sound financial performance on the other. RMK’s eligibility criteria reflect exactly this dual expectation.

Key eligibility requirements for RMK funding 🔗

RMK has laid out a detailed set of eligibility conditions that an NGO must satisfy before it can become a borrowing partner. These conditions cover institutional standing, financial health, field track record, and legal compliance.

Registration and legal standing 🔗

An NGO must be formally registered – typically under the Societies Registration Act, 1860, the Indian Trusts Act, or a similar legal framework. Crucially, the organization’s Bye-laws or Memorandum of Association must contain an explicit clause authorizing it to borrow or raise loans from external agencies. Without this clause, an NGO cannot legally enter into a loan agreement with RMK, regardless of its field work. This is one of the most commonly overlooked requirements.

Experience in thrift, credit, and SHG management 🔗

RMK uses different experience thresholds depending on the loan scheme being applied for. Under the Loan Promotion Scheme, designed for newer and smaller organizations, an NGO needs at least six months of experience in forming SHGs and managing thrift and credit activities. Under the Main Loan Scheme, the bar is higher – a minimum of three years of active work in thrift and credit is required. This tiered structure allows smaller NGOs a path into the system without being shut out entirely.

Loan recovery rate of at least 90% 🔗

This is one of RMK’s most critical benchmarks. Recoveries of loans given to members must be at least 90%. This figure signals to RMK that the NGO has real discipline in its lending operations – that it is not simply distributing credit but actively managing repayment at the SHG level. An NGO with weaker recovery data, regardless of its social impact record, will struggle to pass this threshold.

Audited financial statements and systems 🔗

An NGO applying to RMK must have audited financial statements. If microfinance is a specific program within a larger NGO, those statements must be maintained separately for the microfinance portfolio. Beyond accounts, the organization must have systems in place typical of a financial intermediary – internal audit, risk management processes, and timely Management Information Systems (MIS). RMK expects its partners to function with a degree of financial rigor comparable to formal lending institutions.

No default to any financial institution 🔗

The applying NGO must have a clean repayment record. It should not be in default with any bank, financial institution, NBFC, or government corporation at the time of application. For repeat loans specifically, the organization must have promptly repaid at least 80% of its previous RMK loan without any break or delay in repayment.

Contribution margin of 10% 🔗

An NGO is required to contribute 10% of the sanctioned loan amount from its own resources. This margin requirement ensures the organization has genuine skin in the game and is not wholly dependent on external funds to operate its credit program.

Credit rating for larger loans 🔗

NGOs applying for loan assistance of Rs 1 crore and above must be rated by a recognized credit rating agency at the time of application. For state government organizations, a state government guarantee is required if their balance sheet shows a deficit or loss. This requirement adds a layer of independent financial scrutiny for higher-value borrowing.

Social mandate and broad-based objectives 🔗

The applying organization must have broad-based objectives oriented toward serving the social and economic needs of poor women. The loan application must clearly reflect the sources of funds previously used for credit activities. RMK is not a commercial lender – it evaluates whether an NGO’s mission aligns with the goal of women’s socioeconomic development, not just its financial metrics.

The application and disbursement process 🔗

Once an NGO has assessed its eligibility, the process of actually securing RMK funding follows a structured sequence that includes pre-sanction evaluation, approval, and phased disbursement.

Submitting the application 🔗

NGOs apply using the prescribed RMK loan application format. The application must include a thorough project plan that is both financially and technically feasible, and that clearly demonstrates how the proposed activities align with the organization’s social objectives. The application also needs to identify the source of funds the NGO has previously used for credit purposes, making transparency about financial history a non-negotiable part of the submission.

Pre-sanction study and field evaluation 🔗

If the application clears the initial desk review, RMK conducts a pre-sanction study. This involves representatives from RMK visiting the NGO’s field operations to evaluate its actual functioning – how SHGs are managed, how repayments are tracked, and whether the systems described in the application exist in practice. This step is where paper credentials get tested against ground reality.

Phased fund disbursement 🔗

Approved loans are not released in a single lump sum. For loans up to Rs 1 crore, disbursement happens in two equal installments; loans above Rs 1 crore are released in three installments at a ratio of 40:40:20, based on unit visit reports submitted by RMK’s representatives. Final disbursement requires approval from the competent authority. All on-lending to individual women beneficiaries must be made through Aadhaar-linked bank accounts, ensuring the money reaches intended recipients with traceability.

Post-sanction monitoring 🔗

RMK conducts post-sanction monitoring to evaluate how the loan is being utilized. The NGO is required to submit monthly progress reports on the status and performance of each SHG it promotes. NGOs must maintain prescribed registers at both the NGO level and the SHG level, covering group meetings, savings, and repayment records. This ongoing reporting relationship between the NGO and RMK is not just administrative – it is the mechanism through which accountability is maintained throughout the loan cycle.

The Nodal Agency (NOA) Scheme for newer NGOs 🔗

RMK introduced the Nodal Agency Scheme in 1996-97 specifically to help smaller and newer NGOs access RMK credit without having to meet the full eligibility criteria independently. Under this scheme, reputed and experienced organizations – which may not themselves be borrowing partners of RMK – are appointed as Nodal Agencies. These Nodal Agencies identify and assist new NGOs to eventually establish a credit relationship with RMK. Similarly, the Franchisee Scheme allows smaller state-level NGOs to access RMK funds through a franchisee appointed by RMK for that state, with a credit limit of up to Rs 500 lakhs extended to the franchisee for on-lending to smaller partners. These mechanisms ensure that the eligibility bar does not permanently exclude organizations that are still building their institutional capacity.

Benefits for eligible NGOs and the SHGs they serve 🔗

Qualifying for RMK funding is not just about accessing a loan – it opens a set of resources and institutional relationships that can transform what an NGO is able to deliver to women at the community level.

Access to collateral-free microcredit at scale 🔗

RMK provides micro-credit in a client-friendly, non-collateral manner for income generation activities. For an eligible NGO, this means it can on-lend funds to SHG members – up to Rs 60,000 per new borrower and Rs 1,00,000 per repeat borrower – without requiring women to put up assets as security. In communities where women rarely hold property in their own names, this removes one of the most significant structural barriers to formal credit access.

Loan variety for diverse needs 🔗

RMK’s suite of loan products covers a range of purposes beyond basic income generation. The Housing Loan Scheme allows NGOs to extend up to Rs 1,00,000 per SHG member for construction or repair of low-cost homes. The Working Capital Term Loan (WCTL) supports backward and forward marketing linkages for SHG products, including skill upgradation and infrastructure development. This variety means an NGO can address multiple dimensions of women’s economic lives through a single institutional funding relationship.

Training, capacity building, and SHG promotion support 🔗

Under the Loan Promotion Scheme, RMK provides funds specifically to help NGOs form and develop new SHGs – covering the cost of surveys, identification of potential members, group meetings, training, and local transport for NGO functionaries. A credit of this type can partially convert to a grant based on savings generated by the SHGs, rewarding successful group formation. The design recognizes that financial resources alone do not build effective SHGs – training and consistent handholding do.

A pathway to women’s financial inclusion 🔗

For the SHGs themselves, the benefit extends well beyond the loan amount. Being part of an RMK-linked SHG means regular group meetings, a culture of saving, access to credit for both productive and lifecycle needs (education, healthcare, marriage, housing), and – crucially – a documented credit history. Research on India’s SHG-bank linkage ecosystem consistently shows that women who participate in well-run SHGs develop stronger financial habits and are better positioned to access formal banking services independently over time.

Institutional credibility for the NGO 🔗

Meeting RMK’s eligibility standards – and successfully managing a loan cycle – also builds an NGO’s credibility as a financial intermediary. The audited accounts, recovery records, and field monitoring data that RMK requires become an NGO’s portfolio of evidence when approaching other lenders or donors. In a sector where institutional trust is hard-won, the RMK relationship can serve as a meaningful signal of organizational reliability.

A note on RMK’s current status 🔗

It is worth noting that the Government of India, based on a 2020 review by the Principal Economic Adviser, decided to wind down RMK on the grounds that alternative credit facilities for women – such as Jan Dhan Yojana and PM Mudra Yojana – had expanded substantially, reducing the need for a separate apex microfinance body. RMK’s framework and loan schemes, however, remain a foundational reference point in understanding how NGOs can function as structured financial intermediaries for women’s SHGs, and the eligibility model it developed continues to inform how women-focused microfinance partnerships are evaluated in India.

What do you think? If you were an NGO working in a low-income community, which of RMK’s eligibility criteria do you think would be the hardest to meet – and what steps would you take to build toward that threshold? And beyond funding, what other kinds of institutional support do you think NGOs most need to help women’s SHGs thrive sustainably?

References

1. https://rmk.nic.in/
2. https://pib.gov.in/newsite/PrintRelease.aspx?relid=101652
3. https://rmk.nic.in/loan-schemes
4. https://rmk.nic.in/sites/default/files/loan-application-form.pdf
5. https://rmk.nic.in/books-registers-be-maintained-ngo-level-and-shg-level
6. https://www.indiafilings.com/learn/rashtriya-mahila-kosh/
7. https://egyankosh.ac.in/bitstream/123456789/31780/1/Unit-3.pdf
8. https://www.nabard.org/contentsearch.aspx?AID=225&Key=shg+bank+linkage+programme
9. https://www.pib.gov.in/PressReleasePage.aspx?PRID=1742800