RBI issues Master Circular- Credit facilities to Scheduled Castes & Scheduled Tribes

On 01-08-2022, the Reserve Bank of India (‘RBI') issued Master Circular — Credit facilities to Scheduled Castes (‘SC') & Scheduled Tribes (‘ST') to help the SCs/ STs by increasing self-employment, generate income to make themselves self- liquidating and help in easy loan sanctioning.

The Master Circular consolidates the circulars issued by RBI on the subject till date.

Planning Process

The Banks should follow these measures to set up their advances to SCs/STs:

1. The District Consultative Committees should continue to be the principal mechanism of co-ordination between banks and development agencies.

2. Banks should establish a closer working relationship with the District Industries Centres to promote self-employment.

3. Credit planning should be designed, at the block level itself, in such a way that bank schemes are in the favour of them and they participate in a larger flow of credit ensuring self-employment.

4. Banks should periodically keep a check that loans are sanctioned in time, are adequate and production oriented and they generate incremental income to make them self- liquidating.

5. Villages having sizeable population of SC/ ST communities should be specially chosen.

Role of Banks

1. The staff of the Banks should help the customers to fill in forms, complete formalities to help them to get credit facility within a stipulated time.

2. Banks should spread awareness through circulating brochures and visits by the field staff about the salient features of the scheme and its advantages.

3. The bank should also conduct exclusive meetings to understand credit needs and then incorporate them in the credit plan.

4. Banks should not insist on deposits while considering loan applications under poverty alleviation schemes/ self-employment programmes. It also has to be ensured that subsidy is not held back while releasing the loan component till full repayment of bank dues.

5. The Banks should enable the National Schedule Tribes Finance & Development Corporation (‘NSFDC') and National Scheduled Castes Finance & Development Corporation (‘SCDC') to achieve their desired objectives.

6. Rejection of loan applications to be done at the next higher level of Bank and reasons should be clarified as to why the application has been rejected.

Reservation under major Centrally Sponsored Schemes

Under these schemes, credit is provided by banks, and subsidies are received through Government agencies where RBI monitors the credit flow.

Centrally Sponsored Schemes:

1. Deendayal Antyodaya Yojana – National Rural Livelihoods Mission (‘DAY-NRLM'):

2. Differential Rate of Interest (‘DRI') Scheme: ensures 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.

Guidelines on Credit Enhancement Guarantee Scheme for Scheduled Castes (‘CEGSSC')

CEGSSC was launched on 06-05-2015 with the objective of promoting entrepreneurship amongst the Scheduled Castes (SCs), by providing credit enhancement guarantees to Member Lending Institutions (‘MLI'), which extend financial assistance to these entrepreneurs. IFCI Ltd is its Nodal Agency. The amount of guarantee covered under this programme ranges from Rs. 0.15 cr to a maximum of Rs. 5.00 cr. The tenure is up to a maximum of 7 years or repayment period.

Monitoring and Reviewing

1. The monitoring and reviewing of such Banks will be done at their Head Offices where a special cell will be set up for the same purpose.

2. Responsibilities of the special cell:

   • Ensure implementation of RBI guidelines

   • Responsible for collection of relevant data from the branches of the banks

   • Submission of the returns to RBI and Government

3. Every Head Office of the bank has to review the credit extended to SCs/ STs on the basis of returns. Any gap or variation in credit flow should be reported to the Board.

4. Bank should also review the measures taken to enhance the flow of credit to the borrowers on a quarterly basis. Progress made should also be reviewed.

5. State Level Banker's Committee (‘SLBC') has to invite the representative of National Commission for SCs/ STs to attend SLBC meetings. The Convenor bank may also invite representatives of NSFDC and SCDC to attend SLBC meetings.

Reporting Requirements

Data/Statements on advances has to be reported quarterly and yearly to RBI, Financial Inclusion and Development Department, Statistics Division, Central Office, within 15 days and 1 month, respectively from the date of ending of each quarter and financial year.