Saturday, November 14, 2015

Credit Facilities to SCs & STs

Flow of Credit to SCs / STs

Planning Process

(a)  At the block level, weightage is to be given to scheduled castes / scheduled tribes in the planning process. Special bankable schemes suited to these communities should be drawn up. Banks should consider loan proposals with utmost sympathy and understanding.
(b)    The District Level Consultative Committees should be the principal mechanism of co-ordination between banks and development agencies.
(c)     The district credit plans should indicate the linkage of credit with employment and development schemes.
(d)    Banks will establish closer liaison with the District Industries Centres.
(f)      Banks should review their lending procedures and policies to see that loans are sanctioned in time, are adequate and production-oriented and that they generate incremental income to make them self-liquidating.
(g)     While 'adopting' villages for intensive lending, villages with sizeable population of these communities may be specially chosen.
(h)    Special efforts should be made to evolve suitable bankable schemes for weaker sections including members of these communities.

Role of Banks

(i)          Bank staff may help the poor borrowers in filling up the forms and completing other formalities.
(j)          Awareness among the beneficiaries about various schemes will have to be created by contacting such borrowers and explaining to them the salient features of the schemes as also the advantages that will accrue. Banks should organize meetings with SC / ST beneficiaries to understand their credit needs and to incorporate the same in the credit plan.
(k)      Bank should keep Application Register / Deposit Register, Complaint Register in desired order and maintain relevant documents and pass book in local language too, besides in Hindi and English.
(l)    Circulars issued by RBI / NABARD should be circulated among the staff.
(m)     Banks should not insist on deposits while considering such loan applications. Non release of subsidy upfront amounts to under-financing and hampers asset creation / income generation hence should be avoided.
(n)       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.
(o)       Advances sanctioned to State sponsored organizations of SC / ST, for the specific purpose of purchase and supply of inputs to and / or the marketing of outputs of the beneficiaries viz. artisans, village and cottage industries of these organizations, should be treated as Priority Sector Advances.

Role of SC / ST Development Corporations
(p) SC/ST Development Corporations can consider bankable schemes / proposals for bank finance. As regards Collateral Security and / or third party guarantee for loans, guidelines issued to banks on priority sector lending will apply.

Rejection of Applications
(q) If applications in respect of SCs / STs are to be rejected, it should be done at the next higher level. Further, reasons for rejection should be clearly indicated.

Centrally Sponsored Schemes
There are several major centrally sponsored schemes under which credit is provided and subsidy is received. Under each of these, there is a significant reservation / relaxation for the members of the SC / ST communities.

Reservations for SC / ST Beneficiaries under Major Centrally Sponsored Schemes

National Rural Livelihoods Mission
(r) NRLM would ensure adequate coverage of vulnerable sections of the society such that 50% of these beneficiaries are SC/STs.

National Urban Livelihoods Mission
(s) Under NULM, advances should be extended to SCs / STs to the extent of their strength in the local population.

Differential Rate of Interest Scheme
(t) Banks have been advised to grant to eligible borrowers belonging to SCs / STs such advances to the extent of not less than 2/5th (40 percent) of total DRI advances.

Scheme for Rehabilitation of Manual Scavenger
(u) Government of India stopped funding the NSLRS since 2005-06 and approved the Self Employment Scheme for Rehabilitation of Manual Scavengers (SRMS).

Relaxations/ Reservations for SC/ST beneficiaries under major centrally sponsored schemes
(v) Under the DRI scheme, the eligibility criteria that size of land holding should not exceed 1 acre of irrigated land and 2.5 acres of unirrigated land is not applicable to SCs / STs. Moreover, members of SCs / STs satisfying the income criteria of the scheme can also avail of housing loan up to Rs.20,000/- per beneficiary over and above the individual loan of Rs.15,000/- available under the scheme.

Monitoring and Review

A special cell should be set up at the Head Office for monitoring the flow of credit to SC / ST beneficiaries.

Convenor bank (of SLBC) should invite the representative of National Commission for SCs / STs, representatives from 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

A periodical review should be made by the Head Office of banks of the credit extended to SCs / STs.

The Board of Directors should review on quarterly basis, the measures taken to enhance the flow of credit to SC / ST borrowers. The review should also consider the progress made in lending to these communities directly or through through related agencies. A copy each of such review notes should be sent to Reserve Bank.

Reporting Requirements

It has been considered necessary to have data of banks' advances for SCs and STs under priority sectors and Differential Rates of Interest (DRI) Scheme separately. Accordingly banks may submit half-yearly reports to RBI showing credit extended to SCs and STs under priority sectors and an yearly report showing credit extended to SCs and STs under DRI Scheme.


Based on RBI Circular dt 01/07/15. Please visit www.rbi.org.in for any further clarification if required….. Poppy