Reserve Bank of India Schemes for Minority Community

When it comes to the distribution of loans, those from minority groups are given preference. The Reserve Bank of India (RBI) has established guidelines in order to facilitate the provision of loans to this sector. Domestic regularly scheduled commercial banks as well as international banks with over 20 branches are required to furnish 40 percent of the Adjusted Net Bank Credit (ANBC) or the credit equivalent amount of off-balance sheet exposure (whichever is higher). The provision of financial assistance to groups who are regarded as being vulnerable is what is meant by the term “loans to minorities.” People from underrepresented communities are also included in the weaker parts.  

Definition of Minority Community: 

Sikhs, Muslims, Christians, Zoroastrians, Buddhists, and Jains are the communities that have been recognised by the Indian government as belonging to minority groups. This information comes from the Ministry of Welfare. The relative size of these communities’ populations in comparison to India’s total population allowed for their classification as distinct groups. The government has ordered that banks prioritise giving loans to people who fit within this group of borrowers. The terms of the loans are relatively beneficial, which is one reason why it is an appealing option for the applicant. 

Special cell and nodal officer requirement: 

According to the recommendations issued by the RBI, the bank is required to both establish a specialised cell for the purpose of lending money to members of the minority group as well as nominate an executive officer. A bank official who is currently serving in either the role of Deputy General Manager or Assistant General Manager is required to take charge of the unit.

In addition to this, the banks are required to post an officer in every single minority concentration district. They need to put their attention into resolving issues that are related to the flow of credit and making credit available on terms that are favourable. The officer would not only be responsible for conducting research and assessing the common problems of this community, but they would also be responsible for formulating plans that are suitable for members of minority communities. This responsibility would include conducting research and assessing the common problems of this community. 

Understanding loan for minorities: 

Minorities in India are deemed to be underprivileged, and as a result, they have restricted access to a variety of resources, including money for various reasons like education and the establishment of businesses, among other things. In recognition of this fact, the government of India has established a number of programmes that will make it possible for certain categories of borrowers to gain access to cash on favourable conditions. Loans made available to members of minority groups may be subject to a varied interest rate (DRI). The Reserve Bank of India (RBI) came up with the idea for the DRI scheme, and it has mandated that most commercial banks provide loans for underprivileged people through the DRI scheme. These goals are to improve the lives of those who are less fortunate and to increase the number of people who have access to credit.

The State Minority Finance/Development Corporation has issued a directive that requires banks to make monies available to minority groups through the DRI scheme. The terms and conditions attached to these loans are identical to those that are attached to loans that are obtained through SC/ST development corporations. 

DRI Scheme:

The Differential Rate of Interest (DRI) plan, which also goes by the name DIR, is a programme that was initiated in 1972 with the intention of providing low-income groups with access to credit. The loan programme makes it possible for banks to extend credit to less fortunate members of society at a more lenient interest rate. The applicable interest rate is four percent on an annualised basis.

In 1972, the DRI loans plan, which is also known as the DIR loan scheme, was established in order to provide selected low income groups with financial assistance. The loan programme envisions financial institutions extending credit to disadvantaged segments of the population at a uniformly concessional interest rate of 4% per year for all loans. The following are the most notable aspects of the DRI scheme: 

Purpose of DRI Scheme: 

Offers lower-income areas in the society a discounted rate of interest of 4% per year, which is paid out over the course of the loan. These programmes give disadvantaged groups the opportunity to participate in productive and profitable activities, allowing them to enhance their economic standing within the society as a whole. 

Eligibility for DRI Scheme: 

In urban or semi-urban areas, the applicant’s yearly income should not exceed Rs. 7200 (cumulative across all family members); in rural areas, the applicant’s annual income should not exceed Rs. 6400 per household. There should not be more than one acre of irrigated land held by the applicant, and there should not be more than 2.5 acres of unirrigated land held by the applicant. Also meeting the requirements of SC/ST status is this criterion. 

Quantum of loan: 

The amount of the loan that can be used for productive activities is capped at 6,500 Indian Rupees according to this arrangement. The loan amount that is greater than this value will be subject to the standard interest rate; the borrower will get the preferential rate of interest only on the amount that is equal to or less than this value. People who are physically disabled have the opportunity to receive additional support in the amount of Rs. 5000/- in order to purchase aids, appliances, and equipment, provided that they are eligible for the assistance. 

Collateral: 

There is no need to provide any sort of collateral or assurance from a third party. The banks will get a security interest in any assets that are developed or acquired using the money from the loan. 

Conclusion

A 15-point programme has been established by the Government of India in order to meet the priority sector lending target for India’s Minorities. This initiative strives to ensure that a sufficient percentage of lending by commercial scheduled banks is reserved exclusively for the communities that are considered to be underrepresented in such banks’ customer bases. Both the overall objective for lending to priority sectors and the sub-target of 10 percent for lending to weaker parts have been mandated, and the banks are obligated to adhere to the same levels of both targets.