What changed
The earlier circular dated May 18, 2007 had added a clause (j) under paragraph 8 of Section I of the priority sector lending guidelines. Now, in partial modification, the state of Sikkim is substituted by Meghalaya in the list of states where one minority community is in majority.
What it means for you
Banks must update their internal records and lending guidelines to reflect Meghalaya instead of Sikkim for identifying weaker sections under priority sector lending. This ensures correct targeting of loans to minority communities in states where they form a majority. Non-compliance could lead to misclassification of priority sector advances.
What you must do
- Update the list of states with minority majority in your priority sector lending policy to replace Sikkim with Meghalaya.
- Train branch staff and credit officers on the revised state list for weaker section lending.
- Review existing loans tagged under weaker sections in Sikkim and reclassify if needed.
- Acknowledge receipt of this circular to the RBI as advised.
Who it affects
All scheduled commercial banks (excluding Regional Rural Banks), Priority sector lending departments, Branch managers handling weaker section advances
Why was Sikkim replaced by Meghalaya in the list?
The circular does not specify the reason, but it is a correction to ensure the list accurately reflects states where a minority community is in majority.
Does this change affect existing loans already classified as weaker section advances?
The circular does not address existing loans. Banks should review and reclassify any loans in Sikkim that were tagged under this provision, as per their internal audit.
Which banks are exempt from this circular?
Regional Rural Banks (RRBs) are excluded from the scope of this circular.