What changed
This master circular consolidates and updates all prior DAY-NRLM guidelines, replacing the earlier master circular of July 20, 2022. It reaffirms that no capital subsidy is sanctioned to SHGs under the scheme.
What it means for you
Banks must align their SHG lending and account operations with the consolidated circular, ensuring compliance with updated KYC norms and the prohibition on capital subsidy. The circular reinforces the role of banks in opening accounts for SHGs and federations, and in facilitating revolving fund and CIF disbursement.
What you must do
- Review and replace the July 2022 master circular with this updated version for all DAY-NRLM-related operations.
- Ensure SHG savings accounts are opened only for groups promoting savings habits, with proper KYC as per Master Direction on KYC.
- Do not sanction any capital subsidy to SHGs under DAY-NRLM; only revolving fund and CIF are applicable.
- Verify that SHGs meet the eligibility criteria for revolving fund (minimum 3/6 months existence, adherence to Panchasutras).
Who it affects
Public Sector Banks, Private Sector Banks (including Small Finance Banks), SHGs and their federations under DAY-NRLM, Bank branches handling rural and SHG accounts
What is the key change in this master circular compared to the previous one?
This circular consolidates all existing DAY-NRLM instructions into a single updated document, replacing the July 2022 master circular. No new substantive policy changes are introduced; it is a consolidation exercise.
Are banks allowed to provide capital subsidy to SHGs under DAY-NRLM?
No. The circular explicitly states that no capital subsidy will be sanctioned to any SHG under DAY-NRLM. Only revolving fund and Community Investment Support Fund (CIF) are provided.
What are the KYC requirements for SHG accounts under this circular?
Banks must follow the Master Direction on KYC (dated February 25, 2016, as updated). For PAN/Form 60 submission, banks should refer to Section 33A(b) of that Master Direction.