What changed
The Master Circular on DAY-NULM was updated to include all instructions issued up to March 31, 2021. The revised circular replaces the previous version dated July 1, 2019, and is now available on the RBI website.
What it means for you
Banks must align their lending processes with the updated DAY-NULM framework, which replaces capital subsidy with interest subsidy for individual and group enterprises and SHGs. Lenders need to ensure compliance with mandatory beneficiary reservations (30% women, proportional SC/ST, 5% differently-abled, 15% minorities) and focus on urban poor self-employment ventures.
What you must do
- Update internal policies and loan processing systems to reflect the revised DAY-NULM Master Circular.
- Train branch staff on the interest subsidy mechanism and beneficiary selection criteria under SEP.
- Ensure at least 30% women beneficiaries, proportional SC/ST coverage, 5% differently-abled, and 15% minority earmarking.
- Coordinate with Urban Local Bodies for beneficiary identification and loan sponsorship.
- Review existing DAY-NULM loan portfolios for compliance with updated guidelines.
Who it affects
All Scheduled Commercial Banks, Small Finance Banks, Urban Local Bodies, Community Organizers, Urban poor beneficiaries (individuals, groups, SHGs)
What is the key change from the previous DAY-NULM circular?
The updated circular incorporates all instructions issued up to March 31, 2021, replacing the July 1, 2019 version. The interest subsidy model for SEP loans remains central.
Are there specific beneficiary quotas banks must follow?
Yes: at least 30% women, proportional SC/ST representation, 5% for differently-abled (priority to women), and 15% for minority communities.
How should banks process loan applications under DAY-NULM?
Banks must accept applications sponsored by Urban Local Bodies through Community Organizers, focusing on urban poor individuals, groups, and SHGs for self-employment ventures.