RBI consolidates decades of bank lending rules meant to widen credit access for SC/ST borrowers

The Reserve Bank of India issued a Master Circular on Credit Facilities to Scheduled Castes (SCs) and Scheduled Tribes (STs), consolidating 21 separate circulars it had issued between 1978 and 2013 into a single current statement of the rules, applicable to all scheduled commercial banks, including small finance banks. The circular does not create new obligations but restates existing ones: district-level committees are to give priority to the credit needs of SC/ST applicants, banks are to build links with District Industries Centres to encourage self-employment, and branch staff must assist with loan applications and spread awareness through brochures and field visits. Banks are directed not to insist on deposits or margin money when considering loan applications from SC/ST borrowers under government-sponsored poverty alleviation schemes.

The circular also keeps in place specific targets and schemes aimed at this group, including a 50% SC/ST beneficiary target under the Deendayal Antyodaya Yojana-National Rural Livelihoods Mission, a requirement that 40% of advances under the Differential Rate of Interest Scheme go to SC/ST borrowers, and the Credit Enhancement Guarantee Scheme for Scheduled Castes launched in 2015. Banks must maintain specialised cells at their head offices to monitor credit flow to SC/ST communities and report this data under the Master Direction on Priority Sector Lending.