What changed
The Master Circular was updated to incorporate all instructions issued up to March 31, 2021, replacing the previous version dated July 01, 2019. It consolidates existing guidance without adding separate new policy directions.
What it means for you
Banks must continue to give weightage to SC/ST communities in credit planning at block level and adopt villages with high SC/ST populations for intensive lending. Field staff should proactively create awareness among illiterate borrowers, and subsidies under government schemes must not be withheld against loan repayment.
What you must do
- Ensure district credit plans explicitly link credit with employment and development schemes for SC/STs.
- Train branch staff to assist SC/ST borrowers with application forms and complete formalities within stipulated timelines.
- Organize exclusive meetings for SC/ST beneficiaries to understand their credit needs and incorporate them into credit plans.
- Do not insist on deposits or hold back subsidies when processing loan applications under government-sponsored poverty alleviation schemes.
- Circulate RBI/NABARD circulars on SC/ST lending among all staff for compliance.
Who it affects
All Scheduled Commercial Banks, Small Finance Banks, Lead Banks and District Level Consultative Committees, Branch managers and field staff handling priority sector lending
Does this circular introduce any new lending targets for SC/ST borrowers?
No, the circular is a consolidation of existing instructions up to March 31, 2021. It does not set new targets but reiterates the need for weighted credit planning and special bankable schemes for SC/ST communities.
What should banks do if SC/ST borrowers are illiterate?
Banks should rely on field staff to personally contact borrowers and explain scheme features, rather than using brochures. Organizing exclusive meetings for SC/ST beneficiaries is also recommended.
Can banks insist on deposits from SC/ST borrowers under government schemes?
No, banks must not insist on deposits while considering loan applications under government-sponsored poverty alleviation or self-employment programmes for SC/ST borrowers.