RBI/2023-24/02
FIDD.GSSD.BC.No.02/09.10.001/2023-24

April 01, 2023

The Chairman/Managing Director/Chief Executive Officer
All Scheduled Commercial Banks
(excluding RRBs and Foreign Banks with less than 20 branches)

Madam/ Dear Sir,

Master Circular on Credit Facilities to Minority Communities

The Reserve Bank of India has periodically issued guidelines/instructions/directives to banks with regard to providing credit facilities to Minority Communities. The Master Circular enclosed consolidates the circulars issued by Reserve Bank on the subject till date, as listed in the Appendix.

Yours faithfully,

(Nisha Nambiar)
Chief General Manager

Encl: As above

Master Circular

1. Credit Facilities to Minority Communities:

1.1 In order to ensure that minority communities secure, in a fair and adequate measure, the benefits flowing from various Government sponsored schemes, Scheduled Commercial Banks (referred to as ‘banks’ hereafter) are advised to ensure smooth flow of bank credit to minority communities.

1.2 Government of India has forwarded a list of 121 minority concentration districts having at least 25% minority population (Annexure I), excluding those States/UTs where minorities are in majority (Jammu & Kashmir, Punjab, Meghalaya, Mizoram, Nagaland and Lakshadweep). Accordingly, banks are advised to specially monitor the credit flow to minorities in these 121 districts thereby, ensuring that the minority communities receive a fair and equitable portion of the credit within the overall target of the priority sector.

1.3 In terms of Reserve Bank's Master Direction on Priority Sector Lending (PSL) dated September 04, 2020 (as updated from time to time), a target of 40 percent of Adjusted Net Bank Credit (ANBC) or Credit Equivalent amount of Off-Balance Sheet Exposures (OBE), whichever is higher, as on March 31 of the previous year, has been mandated for lending to the priority sector by domestic Scheduled Commercial Banks and foreign banks; for Small Finance Banks the target is 75% of their Adjusted Net Bank Credit (ANBC). Within this, a sub-target of 12 per cent of ANBC or Credit Equivalent amount of OBE, whichever is higher, as on March 31 of the previous year, has been mandated for FY:2023-24 for lending to weaker sections which includes, among others, persons from minority communities.

2. Definition of Minority Communities

2.1 The following communities have been notified as minority communities by the Government of India, Ministry of Minority Affairs:

(a) Sikhs
(b) Muslims
(c) Christians
(d) Zoroastrians
(e) Buddhists
(f) Jains

2.2 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. Further, if the majority beneficial ownership in a partnership firm belongs to the minority community, then such lending can be classified as advances to the specified communities. A company is a separate legal entity and hence advances granted to it cannot be classified as advances to the specified minority communities.

3. Creation of Special Cell and designating an exclusive Officer

3.1 Each bank should set up a special cell having a Nodal Officer holding the rank of Deputy General Manager/Assistant General Manager or any other similar rank, in order to ensure smooth flow of credit to minority communities.

3.2 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. It shall be his/her responsibility to publicise among the minority communities various programmes of bank credit and also to prepare suitable schemes for their benefit in collaboration with branch managers.

3.3 The designated officer should exclusively look after aspects relating to credit assistance to minority communities in the concerned districts. The designated officer may be attached to the Lead Bank set up at the district level so as to receive necessary guidance from Lead District Manager, who will be senior enough and have adequate experience for liaising effectively with other credit institutions and Government agencies and will also be working in close collaboration with the branch managers of other banks in the district. The designated officer will also arrange group meetings for their guidance for formulation of schemes suitable for the members of the minority communities. Banks concerned may ensure that the role assigned to the designated officer/s is effectively fulfilled.

3.4 The name, designation and office address of (i) the officer-in-charge of the Special Cell at Head Office and (ii) officer appointed by Lead Banks in the identified districts to look after the problems of minority communities exclusively, should be furnished by banks to the National Commission for Minorities and updated periodically. A copy of the relevant communication may also be furnished to The Chief General Manager, Financial Inclusion and Development Department, Reserve Bank of India, SBS Marg, Fort, Central Office, Mumbai 400001.

4. Role of Lead Banks

4.1 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.

4.2 The Lead Banks in the 121 identified districts having concentration of minority communities 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.

4.3 They may collaborate with District Development Managers (DDMs) of NABARD/NGOs/Voluntary Organizations in reaching the poor through Self Help Groups (SHGs).

4.4 The Convenor banks of the District Consultative Committees (DCCs), District Level Review Committees (DLRCs) and the State Level Bankers Committees (SLBCs) should ensure that steps taken to facilitate the flow of credit to the minority communities and the progress made in this regard are reviewed regularly at their meetings. Chairman/Managing Director of State Minority Commissions/Boards or the State Minorities Financial Corporations or their representatives may be invited to attend the meetings of DLRCs/SLBCs.

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, subject to the beneficiaries of the Corporations meeting the eligibility criteria and other terms and conditions prescribed under the scheme. Banks may ensure proper maintenance of the register to evolve timely sanction and disbursement of loan applications.

6. Monitoring

6.1 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 half yearly basis as at the end of March and September every year within one month from the end of each half year (Annexure II).

6.2 The Convenor banks of the District Consultative Committees in the identified minority concentrated districts should furnish the data on priority sector advances granted by banks to specified minority communities compiled by them, in the prescribed format (Annexure III), for the district under their lead responsibility to the concerned Regional Offices of RBl within one month from the close of the relative quarter.

6.3 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).

6.4 The Lead Banks in the identified minority concentrated districts should furnish the relevant extracts of the agenda notes and the minutes of the meetings of the DCCs and of the respective SLBCs to the Ministry of Finance, GoI and to the Ministry of Minority Affairs on a quarterly basis for their use.

7 Training

7.1 With a view to ensuring that the bank staff and officers have proper perspective and appreciation of the various programmes for welfare of minorities, necessary orientation may be provided to officials and other staff. For this purpose, 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.

7.2 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.

7.3 The Lead Banks may organize sensitization workshops for bank officials regarding micro credit/lending to SHGs with the help of DDMs of NABARD.

7.4 The Lead Banks functioning in the identified districts should organize Entrepreneur Development Programmes so that the members of the minority communities in these areas are enabled to derive the benefit of various programmes being financed by the banks. Depending upon the major vocation and type of activity undertaken by large sections of the people in the districts, suitable programmes may be organized in co-operation with State Governments, Industries Department, District Industries Centre, SIDBI, State Technical Consultancy Organization, Khadi and Village Industries Commission and other voluntary organizations which are fully equipped to impart such training and orientation. The duration of the programme, the course content, the faculty support to be selected etc. should be decided by each Lead Bank taking into account the prevailing conditions, need and existing skills as well as aptitude of the people in the district.

8 Publicity

Banks should create publicity through various means about the anti-poverty programmes of the Government where there is large concentration of minority communities and particularly in the districts listed in the Annexure I. 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 (i) print media i.e., distribution of pamphlets in local languages, advertisements/articles in newspapers etc. (ii) TV channels - DD/local channels, (iii) 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. NMDFC works as an apex body and channelises its funds to the beneficiaries through the State Minority Finance Corporation of each State/Union Territory. 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

An important objective of the above Programme is to ensure that an appropriate percentage of the priority sector lending is targeted for the minority communities and that the benefits of various Government sponsored schemes reach the under-privileged, which includes the disadvantaged sections of the minority communities. The New Programme is to be implemented by the Central Ministries/Departments concerned through State Governments/Union Territories and envisages location of certain proportion of development projects in minority concentration districts. Accordingly, all Scheduled Commercial Banks are required to ensure that within the overall target for priority sector lending and the sub-target of 12 percent 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.

Appendix

Credit Flow to Minority Communities

List of Circulars consolidated in the Master Circular