RBI/2007-2008/89
RPCD NO. SP.BC. 12 / 09.10.01/2007-08

July 5, 2007

All Commercial Banks
Dear Sir,

Master Circular-Priority Sector Lending - Credit facilities to Minority Communities

Reserve Bank of India has, periodically, issued instructions/directives to banks with regard to providing credit facilities to Minority Communities. To enable banks to have current instructions at one place, a Master Circular incorporating all the existing guidelines/instructions/directives has been prepared and is appended. We advise that this Master Circular has been updated and consolidates all circulars on this subject issued by Reserve Bank till date as indicated in the Annexure– IV.

Please acknowledge receipt.

Yours faithfully,
(G. Srinivasan)
Chief General Manager

INDEX

Master Circular

PRIORITY SECTOR LENDINGS -
SPECIAL PROGRAMMES

1. CREDIT FACILITIES TO MINORITY COMMUNITIES

   
   The Government of India have indicated that care should be taken to see that minority communities secure, in a fair and adequate measure the benefits flowing from various Government sponsored special programmes. All commercial banks, both in public and private sector have been advised to ensure smooth flow of bank credit to 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 Welfare:
   1. Sikhs
      
   2. Muslims
      
   3. Christians
      
   4. Zoroastrians
      
   5. Buddhists
      
      

3. Creation of Special Cell and Designating an exclusive Officer

   
   3.1 A Special Cell should be set up in each bank to ensure smooth flow of credit to minority communities and it should be headed by an officer holding the rank of Deputy General Manager/Assistant General Manager or any other similar rank who should function as a ‘Nodal Officer’.
   
   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 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 Recently, Government of India have forwarded a list of 103 minority concentration districts having at least 25% minority population, excluding those States/UTs where minorities are in majority (J & K, Punjab, Meghalaya, Mizoram, Nagaland & Lakshdweep). Accordingly, all scheduled commercial banks have been advised vide our circular ref. RPCD.SP.BC.No.83/ 09.10.01/2006-07 dated April 27, 2007 thereby advising to specially monitor the credit flow to minorities in these 103 districts as against the 44 districts which are presently being monitored, thereby ensuring that the minority communities receive a fair and equitable portion of the credit within the overall target of the priority sector. ( Updated List of Minority concentration districts at Annexure II)
   
   3.4 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. He would thus, be able to receive necessary guidance from Lead Bank Officer, who will be senior enough and have adequate experience for liaising effectively with the 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. It will be necessary for the banks concerned to ensure that the role assigned to the designated officer/s is effectively fulfilled.
   
   3.5 The convener banks of the District Consultative Committees (DCCs) 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.
   
   3.6 The Convener banks of DLRC/SLRM/SLBCs may invite Chairman/Managing Directors of State Minority Commissions/Boards or the State Minorities Financial Corporations or their representatives to attend the meetings of District Level Review Committee (DLRC), State Level Review Meeting (SLRM) and State Level Bankers Committee (SLBC)
   
   3.7 Names, designation and office addresses 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 exclusively the problems of minority communities, should be furnished by banks to the National Commission for Minorities at the following address and updated periodically:
   
   The Secretary,
   National Commission for Minorities,
   Government of India,
   Lok Nayak Bhavan,
   5th Floor, Khan Market,
   New Delhi – 110 003.
   
   A copy of the relevant communication may also be furnished to Rural Planning and Credit Department, Reserve Bank, Central Office, Mumbai.
   
   3.8 The Lead Banks in the 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.
   
   3.9 The Lead Banks in the identified districts may collaborate with DDMs of NABARD / NGOs / Voluntary Organizations in reaching the poor through Self Help Groups (SHGs).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. 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.
   
   

5. Monitoring

   
   5.1 With a view to monitoring the performance of banks in providing credit to the specified minority communities, data on credit assistance provided 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 Welfare, on half yearly basis as on the last Friday of March and September every year. The statements (given in Annexure I) should reach RBI within one month from the close of each half-year.
   
   5.2 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 and accordingly included in the prescribed statement. A company has a separate legal entity and hence advances granted to it cannot be classified as advances to the specified minority communities.
   
   5.3 The convenor banks of the District Consultative Committees in the identified districts should furnish the data on priority sector advances granted by banks to specified minority communities compiled by them in the prescribed format (vide Annexure III) for the district under their lead responsibility to the concerned Regional Offices of RBI within one month from the close of the relative quarter. A list indicating the names of the identified districts, the respective lead banks and RPCD Regional offices to whom the lead bank should submit the statement is in Annexure II.
   
   5.4 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).
   
   5.5 The Lead Banks in the identified 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 Union Ministry of Finance and to the Ministry of Welfare on a quarterly basis for their use.
   
   

6. Training

   
   6.1 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.
   
   6.2 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.
   
   6.3 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.
   
   6.4 The Lead Banks may organise sensitization workshops for bank officials regarding micro credit/ lending to SHGs with the help of DDMs of NABARD.
   
   

7. Publicity

   
   7.1 There should be good publicity about various anti-poverty programmes of the Government where there is large concentration of minority communities and particularly in the districts listed in the Annexure II which have a concentration of minority communities.
   
   7.2 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 these communities.
   
   

8. National Minorities Development and Finance Corporation (NMDFC)

   
   8.1 National Minorities Development and Finance Corporation (NMDFC) was established in September 1994 to promote economic and developmental activities for the backward sections amongst the minorities. NMDFC works as an apex body and channelises its funds to the beneficiaries through the State Minority Finance Corporation of the respective State/Union Territory Governments.
   
   8.2 The NMDFC is operating, inter-alia, the Margin Money Scheme. Bank finance under the scheme will be up to 60 percent of the project cost. The remaining amount of the project cost is shared by NMDFC, the State channelising agency and the beneficiary in the proportion of 25%, 10%, and 5%, respectively. Banks may implement the Margin Money scheme evolved by NMDFC. While extending bank finance, banks should bear in mind the guidelines/instructions issued by RBI from time to time on priority sector advances. It may be ensured that the assets created out of the loan amount are mortgaged/hypothecated to the banks. Where recoveries have been made by the banks, it would be in order if the amounts are appropriated first towards bank dues.
   
   

9. Prime Minister's 15 Point Programme for the Welfare of Minorities

   
   Government of India have recently revised the "Prime Minister's New 15-Point Programme for the Welfare of Minorities". An important objective of the aforesaid 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 concentrated districts. Accordingly, all scheduled commercial banks have been advised vide circular ref. RPCD.SP.22/ 09.10.01/ 2006-07 dated September 1,2006 thereby advising them to ensure that within the overall target for priority sector lending and the sub-target of 10% for the weaker sections, 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 by while preparing district credit plans.

ANNEXURE 1
Statement showing Priority Sector Advances granted to the Members of the specified Minority Communities vis-à-vis Overall Priority Sector Advances for the Half-year ended
(Vide paragraph 5.1)

(No. of Accounts - Actuals)
(Amount in lakhs of Rupees)

Bank Name ____________________________________________________ Bank Code __________
Part 'A' - For Identified Districts

Bank Name ____________________________________________________ Bank Code __________
Part 'B' - For All Districts in the Country

ANNEXURE II

List of Minority Concentration Districts
(vide paragraphs 3.2, 5.3, and 7.1)

List of districts having 25% and more minority population in 29 States (Excluding six States/UTs where minorities are in majority)

ANNEXURE III

Statement showing priority sector advances granted to the members of specified minority communities vis-à-vis overall priority sector advances (in the identified Districts) for the quarter ended ---------------

(Vide paragraph 5.3)
Name of the District ----------------------------------
(Rs. in Crores)
Name of Community No. of accounts Amounts outstanding

Previous Quarter Current Quarter Previous Quarter Current Quarter

1. Minority Communities
   1. Christians
   2. Muslims
   3. Buddhists
   4. Sikhs
   5. Zoroastrians
   TOTAL ( 1 TO 5 )
   
2. Others
   
   
3. Total priority sector advances in the identified districts
   (A + B)
   
   
4. Share of A out of C in % Note : (1) No. of accounts actual, (2) Amount outstanding Rupees in crores

MASTER CIRCULAR
ANNEXURE IV

Credit Flow to Minority Communities
List of Circulars consolidated in the Master Circular