RBI Master Circular on Credit Facilities to Scheduled Castes (SCs) and Scheduled Tribes (STs): A Step Towards Inclusive Credit Access
The Reserve Bank of India (RBI) has issued a Master Circular consolidating its guidelines on providing credit facilities to Scheduled Castes (SCs) and Scheduled Tribes (STs). This initiative aims to enhance financial inclusion and socio-economic development among historically disadvantaged communities. Banks are expected to adopt a proactive and sympathetic approach in extending timely and adequate credit support to SC/ST borrowers.
Planning and Coordination
District Level Consultative Committees under the Lead Bank Scheme remain central to coordinating credit plans that link with employment and development programs. Banks are advised to work closely with District Industries Centres and prioritize SC/ST populations during credit planning, especially in blocks and villages with a high concentration of these communities.
Banking Practices and Support Measures
Banks must simplify procedures and assist SC/ST borrowers in completing loan applications. Staff should actively promote awareness of credit schemes via brochures and outreach, and conduct exclusive meetings to understand specific credit needs. Importantly, banks must not demand deposits for loans under government-sponsored self-employment schemes and must release subsidies upfront.
The circular emphasizes institutional collaboration, urging banks to support organizations like the National Scheduled Castes Finance and Development Corporation and National Scheduled Tribes Finance and Development Corporation. Furthermore, loans extended to state-sponsored bodies for SC/ST beneficiaries are classified under the priority sector.
Special Schemes and Reservations
Government programs such as the Deendayal Antyodaya Yojana – National Rural Livelihoods Mission (DAY-NRLM) mandate that 50% of beneficiaries should be SCs/STs. Under the Differential Rate of Interest (DRI) Scheme, banks must allocate at least 40% of DRI advances to SC/ST borrowers, who also benefit from relaxed eligibility norms. The Credit Enhancement Guarantee Scheme for Scheduled Castes (CEGSSC) further supports entrepreneurship by providing credit guarantees through IFCI Ltd. for loans ranging from ₹0.15 crore to ₹5 crore.
Monitoring, Review, and Reporting
Banks are instructed to establish dedicated monitoring cells at their head offices, regularly review credit flow to SC/ST borrowers, and report discrepancies to their boards. SLBC convenors must include representatives from relevant commissions and finance corporations in their meetings. Banks must also comply with priority sector lending reporting norms.
This circular reiterates RBI’s commitment to equitable access to finance and the empowerment of marginalized communities through structured and monitored credit support systems.
