The Reserve Bank of India (RBI) on August 01,2022, issued master circular on Credit facilities to Scheduled Castes (SCs) & Scheduled Tribes (STs) to consolidates the circulars issued by Reserve Bank on the subject till date.
The foremost provisions of the master circular are as follows:
• Role of Banks
o Bank staff may help the borrowers in filling up the forms and completing other formalities so that they are able to get credit facility within a stipulated period from the date of receipt of applications.
o In order to encourage SC/ST borrowers to take advantage of credit facilities, greater awareness among them about various schemes formulated by banks needs to be created through various means such as brochures, visits by field staff etc so that salient features of the schemes, as also the advantages that will accrue to them are known to such borrowers. Banks should advise their branches to organize meetings more frequently exclusively for SC/ST beneficiaries to understand their credit needs and to incorporate the same in the credit plan.
o Circulars issued by RBI/NABARD should be circulated among the staff for compliance.
o Banks should not insist on deposits while considering loan applications under Government sponsored poverty alleviation schemes/self-employment programmes from borrowers belonging to SCs/STs. It should also be ensured that applicable subsidy is not held back while releasing the loan component till the full repayment of bank dues. Non-release of subsidy upfront amounts to under-financing and hampers asset creation/income generation.
o The National Scheduled Tribes Finance & Development Corporation and National Scheduled Castes Finance & Development Corporation have been set up under the administrative control of Ministry of Tribal Affairs and Ministry of Social Justice & Empowerment, respectively. Banks should advise their branches/controlling offices to render all the necessary institutional support to enable these institutions to achieve the desired objectives.
o Loans sanctioned to State Sponsored Organisations for Scheduled Castes/ Scheduled Tribes for the specific purpose of purchase and supply of inputs and/or the marketing of the outputs of the beneficiaries of these organisations are eligible for priority sector classification.
o Rejection of SC/STs’ loan applications under government programmes should be done at the next higher level instead of at the branch level and reasons of rejection should be clearly indicated.
• Role of SC/ST Development Corporations
o The Government of India has advised all State Governments that the Scheduled Caste/Scheduled Tribes Development Corporations can consider bankable schemes/proposals for bank finance.
• Reservations for SC/ST beneficiaries under major Centrally Sponsored Schemes.
There are several major centrally sponsored schemes under which credit is provided by banks and subsidy is received through Government Agencies. Credit flow under these schemes is monitored by RBI. Under each of these, there is a significant reservation/relaxation for the members of the SC/ST communities.
o Deendayal Antyodaya Yojana - National Rural Livelihoods Mission (DAY-NRLM) DAY-NRLM (previously known as NRLM) was launched by the Ministry of Rural Development, Government of India by restructuring the erstwhile Swarnajayanti Gram Swarozgar Yojana, effective from April 1, 2013. DAY-NRLM would ensure adequate coverage of vulnerable sections of the society such that 50% of these beneficiaries are SC/STs. Details of the scheme are available in the Master Circular on DAY-NRLM as updated from time to time.
o Deendayal Antyodaya Yojana - National Urban Livelihoods Mission (DAY-NULM) The Ministry of Housing and Urban Affairs (MoHUA), Government of India, launched the DAY-NULM (previously known as NULM) by restructuring the erstwhile Swarna Jayanti Shahari Rozgar Yojana (SJSRY), effective from September 24, 2013. Under DAY-NULM, advances should be extended to SCs/STs to the extent of their strength in the local population. Details of the scheme are available in the Master Circular on DAY-NULM as updated from time to time.
o Differential Rate of Interest (DRI) Scheme Under the DRI Scheme, banks provide finance up to ₹15,000/- at a concessional rate of interest of 4 per cent per annum to the weaker sections of the community for engaging in productive and gainful activities. In order to ensure that persons belonging to SCs/STs also derive adequate benefit under the DRI Scheme, banks have been advised to grant eligible borrowers belonging to SCs/STs such advances to the extent of not less than 2/5th (40 percent) of total DRI advances. Further, the eligibility criteria under DRI, viz. size of land holding should not exceed 1 acre of irrigated land and 2.5 acres of unirrigated land, are not applicable to SCs/STs. Members of SCs/STs satisfying the income criteria of the scheme can also avail of housing loan up to ₹20,000/- per beneficiary over and above the individual loan of ₹15,000/- available under the scheme.
• Monitoring and Review
o A special cell should be set up at the Head Office of banks for monitoring the flow of credit to SC/ST beneficiaries. Apart from ensuring the implementation of the RBI guidelines, the cell would also be responsible for collection of relevant information/data from the branches, consolidation thereof and submission of the requisite returns to RBI and Government.
o The Head Office of banks should periodically review the credit extended to SCs/STs on the basis of returns and other data received from the branches. Any major gap or variation in credit flow to SCs/STs on a year to year basis should be reported to the Board as part of the review on the theme of “Financial Inclusion” in term of circular DBR No.BC.93/29.67.001/2014-15 dated May 14, 2015.
o Banks should review the measures taken to enhance the flow of credit to SC/ST borrowers on a quarterly basis. The review should also consider the progress made in lending to these communities directly or through the State Level Scheduled Caste/Scheduled Tribe Corporations for various purposes based, amongst others, on field visits of the senior officers from the Head Office/Controlling Offices.
o SLBC Convenor bank should invite the representative of National Commission for SCs/STs to attend SLBC meetings. Besides, the Convenor bank may also invite representatives from the National Scheduled Castes and Scheduled Tribes Finance and Development Corporation (NSFDC) and State Scheduled Castes and Scheduled Tribes Finance and Development Corporation (SCDC) to attend SLBC meetings.
Disclaimer – Kindly find all the consolidated circular in the appendix of the provided Link/Document.
[Circular No. RBI/2022-2023/97 FIDD.CO.GSSD.BC.No.10/09.09.001/2022-23]
