RBI issues Master Circular on Credit Facilities to Minority Community

On 02-08-2022, the Reserve Bank of India (‘RBI') issued Master Circular on Credit Facilities to Minority Communities, consolidating all circulars issued on the subject till date.

It lays out details about the credit facilities available to the minority communities, and how the same has to be made available to them.

Credit Facilities to Minority Community

1. The benefits flowing from various Government sponsored schemes, Scheduled Commercial Banks (‘Bank') are advised to keep the flow of bank credit smooth to minority communities.

2. A list of 121 minority concentration districts, having at least 25% minority population, is forwarded by the Government, excluding the state/UTs where minorities are in majority.

3. The banks have to specially monitor the credit flow of these 121 districts, ensuring a fair and equitable portion of the credit within the overall target of the priority sector.

4. According to the Master Direction on Priority Sector Lending dated 04-09-2020, a sub target of 11.5% of Adjusted Net Bank Credit or Credit Equivalent amount of Off- Balance Sheet Exposures, whichever is higher, as on March 31 of the previous year, has been mandated for FY: 2022 —2023 for lending to weaker sections which includes, among others, persons from minority communities.

Definition of Minority Communities

1. These communities have been notified as minority by the Government of India, Ministry of Minority Affairs:

   • Sikhs

   • Muslims

   • Christians

   • Zoroastrians

   • Buddhists

   • Jain

2. In a partnership firm, majority of partners being of the specified community, advances granted to such firms will be treated as advances granted to such community.

3. Further, if the majority beneficial ownership in a partnership firm belongs to the minority community, then such lending can be classified as advances to the specified communities.

Creation of Special Cell and designating an exclusive Officer

1. A special cell has to be set up by each bank, having a Nodal Officer, holding the rank of DGM/ AGM, who will ensure smooth credit flow to minority communities.

2. Responsibilities of the Nodal Officer:

   • Look after credit flow problems

   • Publicize various programmes of bank credit

   • Prepare suitable schemes

   • Arrange group meetings for formulation of schemes

3. The Officer should be attached to the Lead Bank set up at the district level so that he can receive necessary guidance from the Lead District Manager.

4. The name, designation, and address of the Nodal officer and officer appointed by lead banks in the identified districts to take after the problems of a minority community should be furnished by the banks to the National Commission for Minorities, a copy which should be furnished to the Chief General Manager, Financial Inclusion and Development Department, RBI.

Role of Lead Banks

1. Lead Banks will have to exercise their proactive role, ensuring that the poor and illiterate have access to bank credit for taking up productive activities

2. In the 121 identified districts, the Lead Banks may involve State Minority Commission/ Finance Corporation in the extension work: creating awareness, identification of beneficiaries, preparation of viable projects, provision of backward and forward linkages.

3. Lead Banks can also collaborate with District Development Managers of NABARD/ NGOs/ Voluntary Organizations to reach the poor through Self Help Groups (‘SHG').

4. The Convenor Banks of the District Consultative Committees (‘DCC'), District Level Review Committees (‘DLRCs) and the State Level Bankers Committees (SLBCs) should ensure that steps are taken to facilitate credit flow and the progress is reviewed at the meetings.

Advances under DRI Scheme

1. Under this scheme, loans can be routed through State Minority Finance/ Development Corporation.

2. Banks should ensure proper maintenance of the register to evolve timely sanction and disbursement of loan applications.

Monitoring

1. Data on credit extended to borrowers should be furnished to RBI and to the Government, Ministry of Finance and Ministry of Minority Affairs, on half yearly basis, at the end of March and September every year.

2. The progress made in credit flow should be reviewed regularly at the meetings of the DCC and the SLBC.

3. The Lead Banks should furnish the relevant extracts and minutes of the meetings of the DCCs and of the SLBCs to the Union Ministry of Finance and to the Ministry of Minority Affairs on a quarterly basis.

Training

1. To ensure that the bank staff and officers have a proper perspective of the various programmes for the welfare of minorities, banks should include suitable lecture sessions as part of all training programmes like induction courses, programmes on rural lending, financing of priority sectors and poverty alleviation programmes.

2. Lead Banks should motivate the staff posted to identified districts through proper training to assist the minority community.

3. Lead banks should train the staff of the banks regarding micro credit/ lending to SHGs with the help of DDMa pf NABARD, by conducting workshops.

4. Lead Banks should organize Entrepreneur Development Programmes so that the members of such group in these areas are enabled to derive the benefit of various programmes being financed by the banks.

Publicity

The anti-poverty programmes of the Government regarding credit facilities available from banks should be publicized through:

• Print media

• TV channels

• Participation/ setting of stalls

National Minorities Development and Finance Corporation (NMDFC)

1. It is the apex body and channelizes its funds through the State Minority Finance Corporation of each State/ Union Territory.

2. It promotes economic and development activities for the backward sections amongst the minorities.

Prime Minister's new 15 Point Programme for the Welfare of Minorities

1. The objective is to ensure that an appropriate percentage of the priority sector lending is targeted for the minority communities and that the benefits of various government-sponsored schemes reach the under-privileged, including the minority group.

2. This programme should be implemented by the Central Ministries/ Departments in minority concentration districts.

3. All Scheduled commercial banks are required to ensure that the minority communities receive an equitable portion of credit.