What changed
RBI issued a Master Circular (FIDD.CO.GSSD.BC.No.03/09.09.001/2023-24) that consolidates all previous circulars on credit facilities to SCs/STs into one document. The circular brings together existing instructions but does not explicitly state that no new policy changes are introduced.
What it means for you
Banks must now refer to this consolidated circular for all SC/ST lending guidelines, ensuring uniformity in compliance. The emphasis on weightage in credit planning, adoption of SC/ST-concentrated villages, and prohibition on deposit requirements for government scheme loans reinforces RBI's focus on financial inclusion for these communities.
What you must do
- Update internal credit policies to align with the consolidated Master Circular for SC/ST lending.
- Ensure district credit plans give weightage to SC/ST borrowers and link credit with employment schemes.
- Adopt villages or localities with significant SC/ST populations for intensive lending.
- Train branch staff to assist SC/ST borrowers with loan applications and create awareness of schemes.
- Do not insist on deposits for loans under government poverty alleviation or self-employment programs.
Who it affects
All Scheduled Commercial Banks including Small Finance Banks, Lead Banks and District Level Consultative Committees, Branch managers and field staff handling priority sector lending, SC/ST borrowers and self-help groups
Does this Master Circular introduce new lending targets for SC/ST borrowers?
No, the circular consolidates existing guidelines without setting new targets. It reiterates that banks should give weightage to SC/STs in credit planning and adopt villages with high SC/ST populations.
Can banks ask for deposits from SC/ST borrowers under government-sponsored schemes?
No, the circular explicitly states banks should not insist on deposits while considering loan applications under government poverty alleviation or self-employment programs for SC/ST borrowers.
What is the role of District Industries Centres as per this circular?
Banks must establish closer liaison with District Industries Centres to promote self-employment among SC/ST borrowers, as these centres are set up for that purpose.