The Reserve Bank of India has issued guidelines/instructions/directives to banks to ensure that minority communities receive fair and adequate access to bank credit. The Master Circular on Credit Facilities to Minority Communities consolidates all the circulars issued by the Reserve Bank on this subject until now.
RBI Master Circular dated 01/04/2023: Credit Facilities to Minority Communities
1. Credit Facilities to Minority Communities
The government of India has identified 121 minority concentration districts having at least 25% minority population. Scheduled Commercial Banks are advised to specially monitor the credit flow to minorities in these districts to ensure they receive a fair and equitable portion of credit within the overall target of the priority sector.
Under Reserve Bank’s Master Direction on Priority Sector Lending, a sub-target of 12% of ANBC or Credit Equivalent amount of OBE, whichever is higher, has been mandated for lending to weaker sections, which includes minority communities.
2. Definition of Minority Communities
The following communities have been notified as minority communities by the Government of India, Ministry of Minority Affairs: Sikhs, Muslims, Christians, Zoroastrians, Buddhists, and Jains.
In the case of a partnership firm, if the majority of the partners belong to one or the other of the specified minority communities, advances granted to such partnership firms may be treated as advances granted to minority communities.
3. Creation of Special Cell and Designating an Exclusive Officer
Each bank should set up a special cell with a Nodal Officer holding the rank of Deputy General Manager/Assistant General Manager or any other similar rank to ensure the smooth flow of credit to minority communities.
The Lead Bank in each of the minority concentration districts should have an officer who shall exclusively look after the problems regarding the credit flow to minority communities. The designated officer should exclusively look after aspects relating to credit assistance to minority communities in the concerned districts.
4. Role of Lead Banks
The Lead Banks of the minority concentration districts will have to exercise the pro-active role expected of them to ensure that the minority communities, particularly those who are poor and illiterate have access to bank credit for taking up productive activities.
They may involve the State Minority Commission/Finance Corporation in the extension work, including creating awareness, identification of beneficiaries, preparation of viable projects, provision of backward and forward linkages such as supply of inputs/marketing, recovery, etc.
5. Advances under DRI Scheme
Banks may route loans under the DRI scheme through State Minority Finance/Development Corporation on the same terms and conditions as are applicable to loans routed through SC/ST Development Corporations.
6. Monitoring of flow of credit
Data on credit extended to members of minority communities should be furnished to Reserve Bank of India and to the Government of India, Ministry of Finance and Ministry of Minority Affairs, on a half-yearly basis.
The progress made in regard to the flow of credit to the minority communities should be reviewed regularly at the meetings of the District Consultative Committees (DCCs) and the State Level Bankers Committees (SLBCs).
7. Training to assist minority communities
Banks should include suitable lecture sessions as part of all relevant training programmes like induction courses, programmes on rural lending, financing of priority sectors, poverty alleviation programmes, etc.
The Lead Banks in the identified districts may sensitise and motivate the staff posted to identified districts through proper training to assist the minority communities under various credit schemes.
8. Publicity about Government Initiatives
Banks should create publicity through various means about the anti-poverty programmes of the Government where there is a large concentration of minority communities and particularly in the districts listed in Annexure I of the Cicular.
The Lead Banks in the identified districts may create awareness among minority communities regarding credit facilities available from banks through appropriate measures which may include publicity through print media, TV channels, and participation/setting up of stalls in the Melas/fairs organized during the religious/festive occasions by the minority communities.
9. National Minorities Development and Finance Corporation (NMDFC)
NMDFC promotes economic and developmental activities for the backward sections amongst the minority communities. Banks may implement the schemes evolved by NMDFC. While extending finance, banks should bear in mind the guidelines/instructions issued from time to time on priority sector advances.
10. Prime Minister’s New 15 Point Programme for the Welfare of Minorities
Scheduled Commercial Banks are required to ensure that within the overall target for priority sector lending and the sub-target of 12% for the weaker sections for FY 2023-24, sufficient care is taken to ensure that minority communities also receive an equitable portion of the credit. Lead Banks have been advised to keep this requirement in view while preparing District Credit Plans.
Conclusion
The Master Circular on Credit Facilities to Minority Communities is a comprehensive document that consolidates all the guidelines, instructions, and directives issued by the Reserve Bank of India regarding bank credit to minority communities.
Scheduled Commercial Banks must ensure that the minority communities have access to bank credit and receive a fair and equitable portion of credit within the overall target of the priority sector. They must also establish special cells, designate officers, and collaborate with other institutions to facilitate the flow of credit to minority communities.
The Lead Banks have a critical role to play in this regard and must take a pro-active approach to ensure that the minority communities have access to credit facilities.
By following the guidelines set forth in the RBI’s Master Circular on Credit Facilities to Minority Communities, banks can help promote the economic and developmental activities of minority communities and contribute to their overall welfare.