RBI/2016-17/42
FIDD.GSSD.CO.BC.No.13/09.01.03/2016-17

August 25, 2016

The Chairman / Managing Director
Public and Private Sector Banks

Dear Sir / Madam,

Deendayal Antyodaya Yojana - National Rural Livelihoods Mission (DAY-NRLM) – Aajeevika - Interest Subvention Scheme

Please refer to our circular FIDD.GSSD.CO.BC.NO. 19/09.01.03/2015-16 dated January 21, 2016 on interest subvention scheme under National Rural Livelihoods Mission (NRLM).

2. The revised guidelines for the year 2016-17 on Interest Subvention Scheme under DAY- NRLM, as received from the Ministry of Rural Development, Government of India, are annexed for implementation by all Public Sector Banks and 15 Private Sector Banks (as per list attached).

Yours faithfully

(Uma Shankar)
Chief General Manager

Encl: As above

Interest subvention scheme for Women SHGs - Year 2016-17

I. Interest subvention scheme on Credit to Women SHG during the year 2016-17 for all Commercial Banks (only Public Sector Banks, Private Sector Bank and Regional Rural Banks) and Co-operative banks in 250 districts

i. All women SHGs will be eligible for interest subvention on credit upto Rs. 3 lakhs at 7% per annum. SHG availing capital subsidy under SGSY in their existing credit outstanding will not be eligible for benefit under this scheme.

ii. The Commercial Banks and Cooperative Banks will lend to all the women SHGs in Rural areas at the rate of 7% in the 250 districts is provided at Annexure I

iii. All Commercial Banks will be subvented to the extent of difference between the Weighted Average Interest Charged (WAIC as specified by Department of Financial Services, Ministry of Finance for the year 2016-17 – Annexure II) and 7% subject to the maximum limit of 5.5% for the year 2016-17. This subvention will be available to all the Banks on the condition that they make SHG credit available at 7% p.a. in the 250 districts.

iv. Further, the SHGs will be provided with an additional 3% subvention on the prompt repayment of loans. For the purpose of Interest Subvention of additional 3% on prompt repayment, an SHG account will be considered prompt payee if it satisfies the following criterion as specified by Reserve Bank of India (RBI).

i. Outstanding balance shall not have remained in excess of the limit/drawing power continuously for more than 30 days

ii. There should be regular credit and debits in the accounts. In any case there shall be at least one customer induced credit during a month

iii. Customer induced credit should be sufficient to cover the interest debited during the month.

b. For the Term loans: A term loan account where all of the interest payments and/or instalments of principal were paid within 30 days of the due date during the tenure of the loan, would be considered as an account having prompt payment.

The prompt payment guidelines would continue to be guided by RBI guidelines on the subject in the future.

All prompt payee SHG accounts as on the end of the reporting quarter will be eligible for the additional interest subvention of 3%. The banks should credit the amount of 3% interest subvention to the eligible SHG loan accounts and thereafter seek the reimbursement.

v. The scheme is limited to Women Self Help Groups in rural areas only

vi. The funding for the scheme will be met out of Central Allocation under DAY- NRLM

vii. The interest subvention scheme shall be implemented for all Public Sector Banks and Private sector Banks through a Nodal Bank selected by the Ministry of Rural Development (MoRD). The Nodal Bank will operationalize the scheme through a web based platform, as advised by MoRD. For the year 2016-17, Canara bank has been nominated as the Nodal bank by MoRD.

viii. All Banks, who are operating on the Core Banking Solutions (CBS) can avail the interest subvention under the scheme.

ix. In order to avail the Interest Subvention on credit extended to the SHGs @ 7%, regular subvention, all Public Sector Banks are required to upload the SHG loan account information on the Nodal Bank’s portal as per the required technical specification. Public Sector Banks should also submit the claims for 3% additional subvention on the same portal. Public Sector Banks must submit the regular claims (difference between WAIC or lending rate and 7%) and additional claims (@ 3% on prompt repayment) on a quarterly basis as on June 30, 2016, September 30, 2016, December 31, 2016 and March 31, 2017 by last week of the subsequent month.

x. In order to avail the interest subvention on credit extended to the SHGs @7% and additional subvention claims of 3%, all Public Sector Banks and Private Sector Banks are required to submit claim certificate on quarterly basis to the nodal bank. The claims submitted by any bank should be accompanied by claim certificate (in original) certifying the claims for subvention as true and correct (Annexure-III to V). The claims of any Bank for the quarter ending March 2017 will be settled by MoRD only on receipt of the Statutory Auditor’s certificate for the complete FY16-17 from the Bank.

xi. Any remaining claim pertaining to the disbursements made during the year 2016-17 and not included during the year, may be consolidated separately and marked as an 'Additional Claim' and submitted to Nodal Bank by Public Sector Banks and Private Sector Banks latest by June 30, 2017, duly audited by Statutory Auditor’s certifying the correctness.

xii. Any corrections in claims by Banks shall be adjusted from later claims based on auditor’s certificate. For Public Sector Banks and Private sector Banks, the corrections must be made on the Nodal Bank’s portal accordingly.

II. Interest subvention scheme for Category II Districts (Other than 250 districts).

For category II districts, comprising of districts other than the above 250 districts, all women S.H.Gs under DAY- NRLM will be eligible for interest subvention to avail the loan facility at an interest rate of 7%. The funding for this subvention will be provided to the State Rural Livelihoods Missions (S.R.L.Ms) from the allocation for DAY- NRLM. In the Category II districts, Banks will charge the SHGs as per their respective lending norms and the difference between the lending rates and 7% subjected to a maximum limit of 5.5% for the FY16-17 will be subvented in the loan accounts of the SHGs by the SRLM. In pursuance of the above, the salient features and the operational guidelines in respect of the interest subvention for the category II districts, for the year 2016-17 are as follows:

(A) Role of the Banks:

All banks who are operating on the Core Banking Solution (CBS) are required to furnish the details of the Credit disbursement and Credit outstanding of the SHGs across all districts in the desired format as suggested by the MoRD, directly from the CBS platform, to the Ministry of Rural Development (through FTP) and to the SRLMs. The information should be provided on a monthly basis to facilitate the calculation and disbursement of the Interest Subvention amount to SHGs.

(B) Role of the State Governments:

i. All women SHGs, are regarded as SHGs under DAY- NRLM and will be eligible for interest subvention on credit upto ₹ 3 lakhs at the rate of 7% per annum on prompt repayment.

ii. This scheme will be implemented by the State Rural Livelihood Missions (SRLMs). SRLMs will provide interest subvention to the eligible SHGs who have accessed loan from Commercial and Cooperative Banks. The funding for this subvention will be met out of the Central Allocation and State Contribution as per the norms of Government of India.

iii. The SHGs will be subvented with the extent of difference between the lending Rate of the banks and 7% subject to a maximum limit of 5.5% for the year 2016-17 by the SRLMs, directly on a monthly/quarterly basis. An e-transfer of the subvention amount will be made by the SRLM to the loan accounts of the SHGs who have repaid promptly.

iv. For the purpose of the Interest Subvention, an account will be considered as prompt payee if it satisfies the following criterion as specified by RBI:

a. For Cash Credit Limit:

1. Outstanding balance shall not have remained in excess of the limit/drawing power continuously for more than 30 days

2. There should be regular credit and debits in the accounts. In any case there shall be at least one customer induced credit during a month

3. Customer induced credit should be sufficient to cover the interest debited during the month.

b. For the Term loans: A term loan account where all of the interest payments and/or instalments of principal were paid within 30 days of the due date during the tenure of the loan, would be considered as an account having prompt payment

The prompt payment guidelines would continue to be guided by RBI guidelines on the subject in the future.

v. Women SHGs who have availed capital subsidy under SGSY in their existing loans, will not be eligible for benefit of Interest Subvention for their subsisting loan under this scheme.

vi. SRLMs should submit Quarterly Utilization Certificate indicating subvention amounts transferred to the Loan accounts of the eligible SHGs.

III. The States with state specific interest subvention schemes are advised to harmonize their guidelines with the Central scheme.