At a meeting of the National Credit Council held in July 1968, it was
emphasised that commercial banks should increase their involvement in the
financing of priority sectors, viz., agriculture and small scale industries.
The description of the priority sectors was later formalised in 1972 on the
basis of the report submitted by the informal Study Group on Statistics
relating to advances to the priority Sectors constituted by the Reserve Bank in
May 1971. On the basis of this report, the Reserve Bank prescribed a modified
return for reporting priority sector advances and certain guidelines were
issued in this connection indicating the scope of the items to be included
under the various categories of priority sectors. Although initially there was
no specific target fixed in respect of priority sector lending, in November
1974 the banks were advised to raise the share of these sectors in their
aggregate advances to the level of 33‑1/3 percent by March 1979.
At a meeting of die Union Finance Minister with the Chief Executive
Officers of public sector banks held in March 1980, it was agreed that banks
should aim at raising the proportion of their advances to priority sectors to
40 percent by March 1985. Subsequently, on the basis of the recommendations of
the Working Group on the Modalities of Implementation of Priority Sector
Lending and the Twenty Point Economic Programme by Banks, all commercial banks
were advised to achieve the target of priority sector lending at 40 percent of
aggregate bank advances by 1985. Sub‑targets were also specified for
lending to agriculture and the weaker sections within the priority sector.
Since then, there have been several changes in the scope of priority sector
tending and the targets and sub‑targets applicable to various bank
groups.
At present, the priority sector broadly comprises the following
(i) Agriculture
(ii) Small Scale Industries
(iii) Other activities/borrowers (such as small business, retail trade, small
transport operators, professional and self employed persons, housing, education
lows, micro credit etc.).
Banks have also been assigned to play a greater developmental role for
upliftment of rural and urban poor. Banks are now actively associated with the
implementation of the following programmes/schemes of Government of India and
credit needs of the eligible borrowers under these programmes/schemes are being
liberally met.
Swarna Jayanti Gram Swarozgar Yojana (SGSY) replacing IRDP, TRYSEM.
DWCRA, SITRA, GKY and MWS in rural areas.
·
Prime Minister's Rozgar Yojana (PMRY)
·
Scheme for Liberation and Rehabilitation of
Scavengers (SLRS).
·
Swarna Jayanthi Shahuri Rozgar Yojana (SJSRY).
Besides, die poorest of the poor are being granted liberal assistance at
a very low rate of interest under 'Differential Rate of Interest Scheme' (DRI
Scheme).
Reserve Bank of India has issued detailed guidelines to commercial banks
in respect of priority sector advances, RBI has consolidated all the previous
instructions, directives and guidelines on the subject vide its Master Circular
RPCD No. Plan.BC.42A/04.09.01/2002‑2003 dt.11 November 2002.
Based on the recommendations made by the working groups and high powered
committees appointed by the Government of India and the Reserve Bank, a set of
comprehensive guidelines to he followed for advances to all categories of
borrowers in the priority sector were evolved. These guidelines are detailed in
the subsequent paragraphs. Banks should follow the common guidelines prescribed
by the Reserve Bank for all categories of advances under the priority sector.
In areas covered by special schemes such as SGSY, the concerned project
authorities like DRDAs, DICs etc. should arrange for completion of application
forms received from borrowers. In other areas, the bank staff should help the
borrowers for this purpose.
Banks should give acknowledgement for loan applications received from
weaker sections. Towards this purpose, while getting fresh stocks of
application forms printed, it may be ensured that these forms have perforated
portion for acknowledgement to be completed and issued by the receiving branch.
Each branch may affix on the main applica6on form as well as the corresponding
portion for acknowledgement, a running serial number. While using the existing
stock of application forms till then, an acknowledgement (separately prepared)
should be given for each application, care being taken to ensure that the
serial number given on the acknowledgement is also recorded on the main
application.
All loan applications upto a credit limit of Rs.25,000/‑ should be
disposed of within a fortnight and those for over Rs. 25,000/‑, within 8
to 9 weeks.
Branch Managers may reject applications (except in respect of SC/ST)
provided the cases of rejection are verified subsequently by the Divisional/
Regional Managers. In the case of proposals from SCIST, rejection should be at
a level higher than that of Branch Manager.
A register should be maintained at branch wherein the date of receipt
sanction/rejection/disbursement with reasons therefor etc., should be recorded.
The register should be made available to all inspecting agencies.
As far as possible, disbursement of loan amounts sanctioned should be
made directly to the suppliers of inputs such as seeds, fertilisers, raw
materials implements, trucks, machinery, etc.
With a view to providing farmers wider choice as also eliminating
undesirable practices, banks may disburse all loans for agricultural purposes
in cash which will facilitate dealer choice to borrowers and foster an
environment of trust. However, banks may continue the practice of obtaining
receipts from borrowers.
Repayment programme should be fixed taking into account the sustenance
requirements, surplus generating capacity, the break‑even point, the life
of the asset, etc. and not in an "ad hoe" manner. In respect of
composite loan upto Rs.50,000/‑ to artisans, village and cottage
industries, repayment schedule may be fixed for term loan component only
(subject to SIDBI's requirements being fulfilled).
In case of default on account of natural calamities like floods,
drought, etc crop loans may be converted into medium‑term loans of 3 to 5
years and extension/ re‑payment may be allowed in the case of term loans.
In the case of other borrowers affected by natural calamities, banks may
convert drawings in excess of the value of security into a term loan repayable
over a reasonable period of time and provide further working capital and
extend/ re‑phase the instalments due under term loans.
The rates of interest on various categories of priority sector advances
will be as per RBI directives issued from time to time.
The issue of charging penal interests that should be levied for reasons
such as default in repayment, non‑submission of financial statements etc.
has been left to the Board of each bank. Banks have been advised to formulate
policy to charging such penal interest with the approval of their Boards, to be
governed by well accepted principles of transparency, fairness, incentive to
service the debt and due regard to difficulties of customers.
No penal interest should be charged by banks for loans under priority
sector up to Rs.25,000 as hitherto. However, banks will be free to levy penal
interest for loans exceeding Rs.25,000, in terms of the above guidelines.
No inspection charges should be levied on advances upto Rs.5,000/‑,
For advances above Rs.5,000/‑ but upto Rs.25,000/‑,
inspection charges may be levied at the flat rate of Rs.2.50 per inspection per
borrower. These charges should, however, not exceed Rs.10 per year per
borrower.
For loans above Rs.25,000/‑ reasonable inspection charges may be
levied; care should, however, be taken to see that the inspection charges on
advances to the weaker sections in the priority sector are lower than the rates
framed for such inspection in other cases.
Banks may waive
insurance of assets financed by bank credit in the following cases:
|
No. |
Category |
Type of Risk |
Type of Assets |
|
(a) (b) |
All categories of priority sector advances upto
and inclusive of Rs. 10,000/- Advances to SSI sector upto and inclusive of
Rs. 25,000/- by way of ·
Composite loans to artisans, village and
cottage industries ·
All term loans ·
Working capital where these are against
non-hazardous goods |
Fire
& other risks Fire Fire Fire |
Equipment and current assets Equipment and current assets Equipment Current Assets |
Where, however insurance of vehicle or machinery or other equipment/
assets is compulsory under the provisions of any law or where such a
requirement is stipulated in the refinance scheme of any refinancing agency or
as part of a Government‑sponsored programmes such as, IRDP (since
replaced by SGSY), insurance should not be waived even if the relative credit
facility does not exceed Rs.10,000/‑ or Rs.25,000/‑, as the case
may be.
Banks should not levy any other service charges except by way of
reimbursement of reasonable out of pocket expenses.
While there is no objection to taking photographs of the borrowers, for
purposes of identification, banks themselves should make arrangements for the
photographs and also bear the cost of photographs of borrowers falling in the
category of Weaker Sections. It should also be ensured that the procedure does
not involve any delay in loan disbursement.
All Branch Managers of banks should be vested with discretionary powers to
sanction proposals from weaker sections without reference to any higher
authority. If there are difficulties in extending such discretionary powers to
all the Branch Managers, such powers should exist at least at the district
level and arrangements be ensured that credit proposals on weaker sections we
cleared promptly.
Machinery to Look into Complaints
There should be a machinery at the regional offices to entertain
complaints from the borrowers if the branches do not follow these guidelines,
and verify periodically that these guidelines are implemented by the branches
in actual practice.
The names and addresses of the officer with whom complaints can be
lodged should be displayed on the notice board of every branch.
The details of terms and conditions of advances granted by banks to
borrowers failing under various segments of priority sector are discussed
hereunder.
One of the main beneficiaries of the priority sector advances had been
the farm sector. At present 18% of net bank credit is deployed in Agriculture
sector. This norm will include both direct and indirect agriculture advances
but in no case indirect advance shall exceed 1/4th of 18% i.e. 4.5% of net bank
credit. The direct and indirect agricultural advances are explained as under:
• Direct: Where advances are granted directly to farmers
for agricultural purposes.
• Indirect: Where
advances are granted to societies/other institutions etc. for the benefit of
the farmers.
Another categorization of agricultural advances is based on the period
of repayment i.e. shun terms loans (repayable within 18 to 36 months), medium
term loans (repayable within 3 to 5 years) and long term loans (repayment
period exceeding 5 years).
The various types of credit facilities sanctioned by the banks for
agriculture are enumerated below:
A. Short
Term Loan (For Agricultural Purposes) : Leans am granted to farmers for raising
crops. These loans are granted for short‑terms and the farmers can
purchase seeds/fertilisers/pesticides etc. with the help of these loan. The
loans are generally repayable at the time of harvesting.
Advances up to Rs.5,00,000/‑ are also granted to farmers against
pledge or hypothecation of agricultural produce (including warehouse receipts)
for a maximum period of 12 months. These short term advances we given to the
farmers who have availed crop loans and who draw credit from one bank.
Banks have been permitted to grant crop loans in the shape of cash credit
facility not requiring the farmers to approach for the loan every time a crop
is to be raised. The limits may be sanctioned by the banks on yearly basis as
in other cases and farmers may draw as per their needs and adjust the same at
the time of each harvesting.
§
Short‑term loans for traditional/non‑traditional
plantations and horticulture.
§
Short‑term loans/term loans are also
sanctioned for allied activities such as dairying, fishery, piggery, poultry,
bee‑keeping , etc.
C Medium and Long Term Loan to Farmers for Financing Production and
Development needs
·
Loans for purchase of agricultural implements
and machinery, viz.
q
Purchase of agricultural implements such as ploughs,
harrows, hose, land levellers, bund formers, hand tools, sprayers, dusters, hay
presses, sugarcane crushers, thresher machines etc.
q
Purchase of farm machinery such as tractors,
trailers, power tillers, tractor accessories viz, disc ploughs etc.
q
Purchase of truck, mini trucks, jeeps, pick‑up
vans, bullock carts and other transport equipment etc, to assist the transport
of agricultural inputs and farm products.
q
Transport of agricultural inputs and farm
products.
q
Purchase of plough animals.
·
Development of irrigation potential through,
q
Construction of shallow and deep tube wells,
tanks etc. and purchase of drilling units.
q
Constructing, deepening, clearing of surface
wells, boring of wells, electrification of wells, purchase of oil engines and installation
of electric motor and pumps.
q
Purchase and installation of turbine pumps,
construction of field channels (open as well as underground) etc.
q
Construction of lift irrigation projects.
q
installation of sprinkler irrigation system.
q
Purchase of generator sets for energisation of
pump sets used for agricultural purposes.
·
Reclamation and Land Development Schemes:
q
Bonding of farm lands.
q
Levelling of land.
q
Terracing.
q
Conversion of dry paddy lands into wet
irrigable paddy lands.
q
Wasteland development.
q
Development of farm drainage.
q
Reclamation of soil lands and prevention of
salinisation.
q
Reclamation of ravine lands.
q
Purchase of bulldozers etc.
·
Construction of farm buildings and structure
such as bullock sheds, implement sheds, tractor and truck sheds, farm stores
etc.
·
Construction and running of warehouses, go
downs, silos and cold storages used for storing own produce.
·
Production and processing of hybrid seeds of
crops.
·
Payment of irrigation and other charges such as
charges for hired water from wells and tube wells, canal water charges,
maintenance and upkeep of oil engine and electrical motors, payment of labour
charges, electricity charges, marketing charges, service charges of Custom
Service Units, payment of development cess, etc.
q
Development loans for all plantations,
horticulture, forestry and wasteland etc.
q
Development loans for allied activities.
q
Development of dairying and animal husbandry in
all its aspects.
q
Development of fisheries in all its aspects
from fish catching to stage of export, financing of equipment necessary for
deep sea fishing, rehabilitations of tanks (fresh water fishing), fish breeding
etc.
q
Development of poultry, piggery etc, in all its
aspects including erection of poultry houses, pig houses, bee keeping etc.
q
Development and maintenance of stud farms,
sericulture including grain ages etc. However, breeding of race horses is not
to be classified hem.
q
Bio‑gas plants.
q
Financing of small and marginal farmers for
purchase of land for agricultural purposes.
q
Financing setting up Agriclinies and
Agribusiness Centres by agriculture graduates.
Agricultural loans attract rate of interest, based on the amount
advanced and also on slab system. Loans upto Rs.2.00 lacs are to be sanctioned
at interest rate not exceeding PLR. Beyond this limit banks am free to charge
rate of interest without reference to PLR.
·
Credit for financing the distribution of fertilisers,
pesticides, seeds, etc. Loans upto Rs.25 lakhs granted for financing
distribution of inputs for the allied activities such as cattle feed, poultry
feed etc.
·
Loans to Electricity, boards for reimbursing
the expenditure already incurred by them for providing slow tension connections
from step down point to individual fanners for energising their wells.
·
Loans to SEBs for Systems Improvement Scheme
under Special Project Agriculture (SI‑SPA).
·
Deposits held by the banks in Rural
Infrastructure Development Fund (RIDF) maintained with National Bank for
Agriculture and Rural Development (NABARD).
·
Subscription to bonds issued by Rural
Electrification Corporation (REC) exclusively for financing pump set
energisation programme in rural and semi‑urban areas and also for
financing System Improvement Programme (SI-SPA)
·
Subscription to bonds issued by NABARD with the
objective of financing exclusively agriculture/allied activities.
·
Loans to farmers through Primary Agricultural
Societies (PACS), Farmers Service Societies (FSS) and Large Sized Adivasi
Multipurpose Societies (LAMPS).
·
Other types of indirect finance such as:
q
Finance for hire purchase scheme for
distribution of agricultural machinery and implements.
q
Loans for construction and running of storage
facilities; (warehouses, go downs, market yards, silos and cold storages) in
the producing areas. Loans to only those cold storage units are granted which
are mainly used for hiring. Further the cold storage unit should be in the
rural areas and should be used for storing mainly agricultural produce. The
unit should not also be registered as a small scale industrial unit. If the
cold storage unit is registered as SSI unit, the loans granted to such units
may be classified under advances to SSI, provided the investment in plant and
machinery is within the stipulated ceiling.
q
Advances to Customs Service Units managed by
individuals, institutions or organisations who maintain a fleet of tractors,
bulldozers, well boring equipment, threshers, combines etc. and undertake to
work for farmers on contract basis. If these advances are covered by the
guarantee of DICGC, they should be classified under SSI advances.
q
Loans to individuals, institutions or
organisations who undertake spraying operations.
q
Loans to co‑operative marketing
societies, co‑operative banks for relending to co‑operative
marketing societies (provided a certificate front the State Co‑operative
Bank in favour of such loans is produced) for disposing of the produce of
members.
q
Loans to co‑operative banks of producers
(e.g. Aarey Milk Colony Co‑operative Bank consisting of licensed cattle
owners).
q
Financing the farmers indirectly through the co‑operative
system (otherwise than by subscription to bonds and debentures issues),
provided a certificate from the State Co‑operative Bank in favour of such
loans is produced.
q
Loans to Arthias (commission agents in
rural/semi‑urban areas functioning in markets/mandies) for meeting their
working capital requirements on account of credit extended to farmers for
supply of inputs.
q Loans to farmers for purchase of shares in Co‑operative Sugar Mills and Sugar Mills set up as Joint Stock Companies and other agro‑based processing units. (Maximum 6 shares of Rs.1,000 each or 3 shares of Rs.2000 each. i.e., Rs.6000 per eligible borrower irrespective of their land holding).
q
Loans to National Co‑operative
Development Corporation (NCDC) for on‑lending to the co‑operative
sector for purp6ses coming under the priority sector.
q
Finance extended to dealers, in drip
irrigation/sprinkler irrigation system/agricultural machinery, irrespective of
their location1, subject to the following
conditions:
(i) The dealer
should be dealing exclusively in such items or if dealing in other products, should
be maintaining separate and distinct records in respect of such items.
(ii) A ceiling
of up to Rs.20 lakhs per dealer should be observed.
q
Advances to state‑sponsored corporations
for onward lending to weaker sections.
q
Lending to Non‑Banking Financial
Companies (NBFCs) for on-lending to agriculture.
Kisan Credit Card
Scheme (KCCS)
Under this scheme Kisan Credit Cards are issued to individual farmers,
joint, borrowers, partnership firms,
private and public limited
companies, who are owner‑cultivators or engaged in allied activities or
cultivating on authorised lease land. KCC shall be used to meet financial needs
relating to cultivation including short term requirements for allied
activities/non‑farm sectors.
The credit limit under KCC shall be based on the loan requirement of
farmers keeping in view the cropping pattern, scale of finance and maintenance
cost of farm machines/allied activities. Such limits are in the nature of
revolving cash credit and provide for any number of drawals within the limit/sub‑limit
but without resorting to over drawings. The party availing KCC should not be
defaulter to any financial institution.
The beneficiary shall be issued a credit card cum pass book which is to
be produced whenever the account is operated. KCC shall be valid for a period
of three years subject to annual review.
India has great potential to deve16p its exports of agricultural
products and many hi‑tech projects with foreign collaboration are being
set up at substantially large capital cost. The projects, mainly relate to:
(i) Mushroom production
(ii) Floriculture
(iii) Tissue culture
(iv) Aqua farms & Shrimp
culture
(v) Horticulture
NABARD is associating itself with such projects from its conception stage.
Commercial bank are also participating in financing of these projects. A few
banks notably State Bank of India and Canara Bank have opened specialised
branches to cater to the needs of such agricultural projects which are seen to
have great future.
§ Cash disbursement: Banks may disburse loans for agricultural purpose in cash which will facilitate farmers to opt for dealers of their choice. Banks may, however, continue the practice of obtaining receipt from borrowers.
§ No dues certificate: Obtention of no dues certificate is left to the discretion of lending bankers.
§
Recovery climate: Banks may evolve appropriate mechanism to monitor and recovery of
agricultural loans particularly old sticky loans.
§
Margin/Security: Banks may use discretion on
matters relating to margin/security up to Rs.10,000/‑. However, in
respect of Govt. sponsored schemes, existing instructions will continue.
§
Additional collateral security: The value of security taken should commensurate with the size of loan.
The bankers may desist from asking additional collateral by way of guarantors
where land is mortgaged and is considered adequate.
§
Statement of credit facilities: Banks may furnish the borrowers with a clear statement of credit
facilities extended, separately indicating various fees and charges levied.
§
Visits of Inspectors: Internal inspectors of the banks have to visit during inspection, a few
service area villages, meet borrowers and obtain feedback on the quality of
inter‑action which branch officials have at ground level.
§
Visit of CMD to rural branches: CMDs of banks during visit to States may pay
surprise visits to rural branches so as to send appropriate signals to field
level staff.
§
Self‑Help Groups (SHGs): Branches may ensure operationalisation of model set of documents
prescribed by working group of NG0s and SHGs relating to agreement among
members, loan formats, application forms etc.
§
Dissemination of Information: Branches are to ensure
dissemination of information to farmers regarding type and kind of inputs to be
used etc. through words of mouth as well as printed booklets on a regular
basis.
§
Linking with Farmers' Club: Wherever possible, rural branches may link up their activities with
'farmers' club' established by NABARD for technology transfers.
Small scale industrial units are those engaged in the manufacture, processing
or preservation of goods and whose investment in plant and machinery (original
cost) does not exceed Rs.1 crore. These would, inter alia, include units
engaged in mining or quarrying, servicing and repairing of machinery. In the
case of ancillary units, the investment in plant and machinery (original cost)
should also not exceed Rs.1 crore to be classified under small‑scale
industry.
The investment limit of Rs.1 crore for classification as SSI has been
enhanced to Rs.5 crore in respect of certain specified items under hosiery and
hand tools by the Government of India.
The status of 'Tiny Enterprises' may be given to all small scale units
whose investment in plant & machinery is upto Rs. 25 lakhs, irrespective of
the location of the unit.
Small Scale Service & Business
Enterprises (SSSBE’s)
Industry related service and business enterprises with investment upto
Rs.10 lakhs in fixed assets, excluding land and building will be given benefits
of small scale sector. For computation of value of fixed assets, the original
price paid by the original owner will be considered irrespective of the price
paid by subsequent owners.
An illustrative list of eligible activities as SSSBE's and the
illustrative list of activities that will not qualify as SSSBE is given in
Appendices 24.I and 24.II, respectively.
This includes the following:
(i) Agencies
involved in assisting the decentralised sector in the supply of inputs and
marketing of outputs of artisans, village and cottage industries.
(ii) Government sponsored
Corporation/organisations providing funds to the weaker sections in the
priority sector.
(iii) Advances to handloom co‑operatives.
(iv) Term
finance/loans in the form of lines of credit made available to State Industrial
Development Corporation/State Financial Corporations for financing SSIs.
(v) Credit
provided by banks to KVIC under the scheme for provision of credit to KVIC by
consortium of banks for lending to viable Khadi and Village Industrial Units.
(vi) Funds
provided by banks to SIDBI/SFCs by way of rediscounting of bills of SSI earlier
discounted by the SIDBI/SFCs.
(vii) Subscription to bonds
floated,, by SIDBI, SFCs, SIDCs and NSIC exclusively for financing SSI units.
(viii) Subscription to bonds
issued by NABARD with the objective of financing exclusively non‑farm
sector.
(ix) Financing of NBFCs or
other intermediaries for on‑lending to the tiny sector.
(x) Deposits placed with
SIDBI by Foreign Banks in fulfilment of shortfall in attaining priority sector
targets.
(xi) Bank
finance to HUDCO either as a line of credit or by way of investment in special
bonds issued by HUDCO for on‑lending to artisans, handloom weavers, etc.
under tiny sector may be treated as indirect lending to SSI (Tiny) Sector.
Loans for setting up industrial estates shall be covered under priority
sector.
All advances to KVI sector, irrespective of their size of operations,
location and investment in plant and machinery, will be covered under priority
sector advances and will also be eligible for consideration under the sub‑target
(60 percent) of the SSI segment within the priority sector.
Manufacture of common salt through any process including manual
operation (involving solar evaporation) may be considered as an industrial
activity and credit provided by banks to units engaged in the manufacture of
common salt which satisfy the norms of SSI unit may be classified under advances
to SSI.
Units engaged in ship breaking/dismantling are composite ones which also
undertake the processing of scrap thus obtained and hence the entire activity
can be covered under processing. Therefore, all small scale industrial units
with original cost of plant and machinery not exceeding Rs.1 crore and engaged
in ship breaking/dismantling activity may be considered as small scale
industrial undertaking and bank advances to such units reckoned as priority
sector, advances.
Bank loans to bought leaf factories manufacturing tea are to be reckoned
as priority sector lending to small scale industry, provided the investment in
plant and machinery (original cost) does not exceed the prescribed limits.
Water mills (Gharat) has been recognised as an industrial activity and
shall be eligible for registration as small scale industry.
For more details please refer to Chapter 'Small Scale
Industrial Units'.
Advances granted to 'Small Road and Water Transport Operators (SRWTO)'
owning a fleet of vehicles not exceeding ten vehicles (including the one
proposed to be financed) are included in the priority sector.
The condition of ten vehicles is that of ownership and is not linked to
the advance obtained from bank or any other institution. In other words, if an
individual already owns ten vehicles against which he has not taken any loan
and approaches the bank for loan against a new vehicle to be purchased by him,
the advance for the new vehicle granted by the bank will not be included in
priority sector.
Bank credit extended to hire purchase/leasing finance companies for
onward lending to SRWTO shall be classified as priority sector advance.
Portfolio purchases (purchases of hire purchase receivables) from NBFCs
made after 31.7.98 would also qualify for inclusion under priority sector
lending, provided the portfolio purchases relate to SRWTOs satisfying priority
sector norms.
Retail trade for the purpose of priority sector has two categories as
under
(i) Retail trade in
essential commodities such as fair price shops and consumer co‑operative
stores.
(ii) Other private retail
trade with credit limits not exceeding Rs.10,00.000.
No limit for bank finance has, been fixed for trading units included in
category (i) above. Retail trade here signifies the trading activity being
undertaken by the borrower and is not necessarily related to the level of his
operations. A trade having only a small retail outlet or dealing in a
particular item on wholesale basis will be considered as a retail trader as
long as credit limits sanctioned to him do not exceed Rs.10,00,000.
Retail traders of mineral oils will come under the category of 'small
business' and retail traders in fertilisers will form part of indirect finance
for agriculture.
The facility may be granted for purchase of merchandise or against bills
or book debts arising out of sales operations of borrower.
(i) Medical practitioners
including Dentists,
(ii) Chartered Accountants,
(iii) Cost Accountants,
(iv) Practising Company
Secretaries who are not in the regular employment of any employer,
(v) Lawyers or Solicitors,
(vi)
Engineers,
(vii)
Architects,
(viii) Surveyors,
(ix) Construction
Contractors,
(x) Management Consultants,
(xi) A
person trained in any other art or craft who holds either a degree or diploma
from any institution established, aided, or recognised by Government,
(xii) A person
who is considered by the bank as technically qualified or skilled in the field
in which he is employed.
(xiii) Accredited
journalists and cameramen who are freelancers and who are not employed by a
particular newspaper or magazine.
(xiv) An
individual who runs a 'Health Centre' and who is not a doctor but has received
some formal training about the use of various instruments of physical
exercises.
(xv) An
individual who wants to set up beauty parlours and who holds qualifications in
the particular profession and undertakes the activity as the sole means of
living/earning his/her livelihood.
(xvi) Firms
and joint ventures of professionals and
self‑employed persons (mentioned
above), shall also be eligible.
(i) The
maximum borrowings from the bank should be limited to Rs.10 lakhs out of which
working capital limits should not exceed Rs.2 lakh.
(ii) In
the case of professionally qualified medical practitioner a higher ceiling of
Rs.15 lakh with a sub‑ceiling of Rs.3 lakh for working capital can be
considered for setting up practice in semi‑urban and rural/areas.
The credit facility under the scheme may be made available for-
(i) Purchase of necessary
equipment,
(ii) Repairing or renovating
the existing equipment,
(iii) Acquiring or repairing
the existing business premises,
(iv) Purchase of tools,
(v) Working capital
requirement.
Advances to journalists and cameramen is restricted for acquisition of
equipments for their professional use. Banks give preference to professionals
like doctors etc., who are carrying on their profession in rural or semi‑urban
areas.
Advances granted for purchase of one motor vehicle to professional and
self‑employed persons will not be included under the priority sector
except in the case of qualified medical practitioners.
Advances granted by banks to professional and self‑employed
persons for acquiring personal computers for their professional use (not home
computers), may be classified under this category subject to the overall ceiling
of total borrowings of Rs.10 lakhs and sub‑ceiling of Rs.2 lakhs for
working capital borrowings.
This category includes individuals and firms which manage a business
enterprise established mainly for the purpose of providing any service other
than professional services. The other condition is that the original cost of
the equipment used for the business is not more than Rs.20 lakhs. Banks can fix
individual limits for working capital as per the requirement of different
activities.
This is, in fact, a residual category and all small loans which are not
classified elsewhere may he included under this category. Example under this
category includes advances for acquisition, construction, renovation of
houseboats and other tourist accommodation, distribution of mineral oils,
advances to judicial stamp vendors and lottery ticket agents, etc.
Advances are also sanctioned to State‑sponsored Organisations for
Scheduled Castes/Scheduled Tribes for the specific purpose of purchase and
supply of inputs to and/or the marketing of the outputs of the beneficiaries of
these organisations.
Loans and advances granted to individuals for educational purposes,
including those granted under special schemes, shall be covered under priority
sector. However, loans and advances granted to institutions will not be
included.
Educational Loan
Scheme aims at providing financial assistance on reasonable terms:
(a) to the poor and needy to undertake basic
education,
(b) to the meritorious students to pursue
higher/professional/technical education.
Commercial Banks have a crucial role in facilitating pursuit of higher
education by poor, but meritorious students. Indian Banks' Association has
prepared a Model Educational Loan Scheme which could be implemented by
Commercial Banks, with changes, if any, as per the convenience of the students/
parents to make it more customer friendly.
The salient features of the scheme are as follows:
A. Eligibility Criteria:
a. Studies in India:
§
School education including plus 2 stage.
§
Graduation courses: BA, B.Com., B.Sc., etc
§
Post Graduation courses: Masters & Phd.
§
Professional courses: Engineering, Medical,
Agriculture, Veterinary, Law, Dental, Management, Computer etc.
§ Computer certificate courses of reputed institutes accredited to Dept. of Electronics or institutes affiliated to university. Courses like ICWA, CA, CFA etc.
§
Courses conducted by IIM, 1IT, IISc, XLRI, NIFT
etc.
§
Courses offered in India by reputed foreign
universities. Evening courses of approved Institutes.
§
Other courses leading to diploma/ degree etc.
conducted by colleges/ universities approved by UGC/ Govt. AICTE/AIBMS/ICMR
etc.
§
Courses offered by National Institutes and
other reputed private institutions. Banks
may have the system of
appraising other institution courses depending on future prospects/ recognition
by user institutions.
b. Studies abroad:
§
Graduation : For job oriented professional/
technical courses offered by reputed universities.
§
Post graduation: MCA, MBA, MS, etc.
§
Courses conducted by CIMA-London, CPA in USA
etc.
A-2 Student eligibility:
§
Should be an Indian National
§
Secured admission to professional/ technical
courses through Entrance Test/ Selection process.
§
Secured admission to foreign
university/Institutions.
§
Should have scored minimum 60% (50% for SC/STs)
in the qualifying examination for asdmission to graduation courses.
A.3 Expenses considered for loan:
§
Fee payable to college/ school/ hostel.
§
Examination/ Library/ Laboratory fee.
§
Purchase of books/ equipments/ instruments/
uniforms.
§
Caution deposit/ building fund/ refundable
deposit supported by Institution bills/ receipts.
§
Travel expenses/ passage money for studies
abroad.
§
Purchase of computers ‑ essential for
completion of the course.
§
Any other expense required to complete the
course ‑ like study tours, project work, thesis, etc.
B. Quantum of Finance:
Need based finance subject to repaying capacity of the parents/ students
with margin and the following ceilings.
§
Studies in India ‑ Maximum Rs.7.50 lacs.
§
Studies abroad ‑ Maximum Rs.15 lacs
C. Margin:
§
Upto Rs.2 lacs :
§
Nil Above Rs. 2 lacs : Studies in India: 15%
Studies Abroad: 25%
§
Scholarship/assistantship to be included in
margin.
§
Margin may be brought‑in on year‑to‑year
basis as and when disbursements are made on a pro‑rata basis.
D. Security:
§
Upto Rs.2 lacs : No security
§
Above Rs.2 lacs: Collateral security equal to
100% of the loan amount or guarantee of third person known to bank for 100% of
the loan amount.
Note:
§
The document should be executed by both the
student and the parent/ guardian.
§
The security can be in the form of land/
building/ Govt. securities/ Public Sector Bonds/ Units of UTI,NSC, KVP,
L1Cpolicy,gold, shares/ debentures, bank deposit in the name of student/ parent/ guardian or any other third party with
suitable margin.
§
Wherever the land/ building is already
mortgaged, the unencumbered portion can be taken as security on II charge basis
provided it covers the required loan amount.
§
In case the loan is given for purchase of
computer the same is to be hypothecated to the Bank.
Banks who wish to support highly meritorious/ deserving students without
security may delegate such powers to a fairly higher level authority.
E. Rate of Interest:
§
Upto Rs.2 lacs: PLR
§
Above Rs.2 lacs: PLR + 1 %
§
The interest to be debited quarterly/ half
yearly on simple basis during the Repayment holiday/ Moratorium period.
§
Penal interest @ 2% he charged for above Rs.2
lacs for the overdue amount and overdue period.
§
The loan to be sanctioned as per delegation of
powers preferably by the Branch nearest to the place of domicile.
§
No application for educational loan received
should be rejected without the concurrence of the next higher authority.
§
The loan to be disbursed in stages as per the
requirement/ demand directly to the Institutions/ Vendors of books/ equipments/
instruments to the extent possible.
G. Repayment:
Repayment holiday/Moratorium: Course period + 1 year or 6 months after
getting job, whichever is earlier.
The loan to be repaid in 5‑7 years after commencement of
repayment. If the student is not able to complete the course within the
scheduled time extension of time for completion of course may be permitted for
a maximum period of 2 years. If the student is not able to complete the course
for reasons beyond his control, sanctioning authority may at his discretion
consider such extensions as may be deemed necessary to complete the course.
§
The accrued interest during the repayment holiday
period to be added to the principal and repayment in Equated Monthly
Instalments (EMI) fixed.
§
1‑2% interest concession may be provided
for loanees if the interest is serviced during the study period when repayment
holiday is specified for interest/ repayment under the scheme.
H. Follow up:
Banks to contact college/ university authorities to send the progress report at regular intervals in respect of
students who have availed loan.
I. Processing Charges:
No processing/ upfront charges may be collected on educational loans.
J. Capability Certificate:
Banks can also issue the capability certificate for students going
abroad for higher studies. For this financial and other supporting documents
may be obtained from applicant, if required.
Some of the foreign universities require the students to submit a
certificate from their bankers about the sponsors' solvency/ financial
capability, with a view to ensure that the sponsors of the students going
abroad for higher studies are capable of meeting the expenses till completion
of studies.
K. Other Conditions:
No due certificate need not be insisted upon as a pre‑condition
for considering educational loan. However, banks may obtain a declaration/ an
affidavit confirming that no loans are availed from other banks.
Loan applications have to be disposed of within a period of 15 days to 1
month, but not exceeding the time norms stipulated for disposing of loan
applications under priority sector lending.
In order to bring flexibility in terms like eligibility, margin,
security norms, banks may consider relaxation in the norms on a case to case
basis delegating the powers to a fairly higher lever authority.
RBI has decided that in order to encourage banks to lend more to the
poor and needy students, education loans up to Rs. 7.50 lakh for studies in
India and Rs.15 lakh for studies abroad, respectively, as indicated in the
model scheme will be reckoned under priority sector advances.
Loans for housing (including repairs to the damaged houses) under this
category are divided in two groups as under:
A. Direct Finance
(i) Loans
upto Rs.5 lakh1 in rural/semi‑urban
areas and upto Rs.10 lakh in urban/metropolitan areas for construction of
houses by individuals, excluding loans granted by banks to their own employees.
(ii) Loans
for repairs to the damaged houses of individuals up to Rs.1 lakh in rural and
semi‑urban areas and up to Rs.2 lakhs in urban areas.
(iii) Loans
up to Rs.5 lakh to individuals who wish to acquire or construct new dwelling
units and up to Rs.50,000 for upgradation or major repairs to the existing
units in rural areas under special Rural Housing Scheme of National Housing
Bank (NHB).
B. Indirect Finance
(i) Assistance
given to any governmental agency for construction of houses, or for slum
clearance and rehabilitation of slum dwellers, subject to a ceiling of Rs.5
lakh of loan amount per housing unit.
(ii) Assistance
given to a non‑governmental agency approved by the National Housing Bank
for the purpose of refinance for reconstruction of houses or for slum clearance
and rehabilitation of slum dwellers, subject to a ceiling of loan amount of
Rs.5 lakh per housing unit.
(iii) All
investment in bonds issued by NHB/HUDCO exclusively for financing of housing,
irrespective of the loan size per dwelling unit.
With a view to address the problem of rural housing, the scheme
envisages housing credit to individuals for building modest new houses or
improve/add to their existing dwelling units in rural areas. For the purpose of
extending housing credit, rural area comprises any village/town, whose
population does not exceed 50,000 as per 1991 census.
Rural Housing Scheme envisages provision of Institutional credit upto
Rs.5.00 lakhs for acquiring/constructing of new dwelling units and upto
Rs.50,000/‑ for upgradation/major repairs to the existing units.
Maximum repayment period permitted is 15 years. This will include
repayment holiday at the option of the beneficiary equal to time taken for
completion of construction or 18 months from the disbursement of first
instalment whichever is earlier. The repayment schedule should match income
generation and repaying capacity of the borrower and normally should not exceed
30% of borrower's income.
(i) 25% for newly
constructed houses.
(ii) 40% for old houses of
more than 5 years' age.
(iii) 50% for old houses of
more than 10 years' age.
The rate of interest shall be as
per RBI's directive in force from time to time. Penal interest shall be
charged on overdue amount.
Property shall be mortgaged where house is proposed to be constructed.
Further, banks may also accept security in the form of LIC Polices with
sufficient surrender value/Govt. promissory notes/shares and debentures/gold
ornaments etc. to cover the loan.
(i) In
respect of construction of houses disbursement shall be in stages, after
conducting inspections. Bills of the contractor should be duly verified and
countersigned by the borrower.
(ii) In
respect of ready built houses, entire loan amount may be paid at the time of
registration before the registrar along with the margin money.
Fire insurance policy should be taken during construction period. After
the construction is completed full value of the house should be comprehensively
insured.
Refinance facility is available
from National Housing Bank.
Government of India has launched this scheme to cater to the housing
needs of rural households having annual income upto Rs.32,000. However,
families below poverty line shall be given preference.
Target areas will be rural areas being located at least 20 kms away from
Metros and large towns and 5 kms away from small/medium towns.
Maximum amount of loan shall be restricted to Rs.40,000 net of subsidy
amount of Rs.10,000 per household to be shared between Centre and State
Government in the ratio of 75:25.
Pure consumption loans are granted by the banks under the 'Consumption
Credit Scheme' on the following terms and conditions
An individual who is already a borrower of the bank under either of the
category except housing i.e. who, has been granted a loan by the bank for a
productive purpose.
The credit facility may be granted for
consumption needs on the scale as indicated below :
(i) General consumption 150
(ii)
Medical expenses 500
(iii)
Educational need 200
(iv)
Marriage ceremonies 500
(v) Funeral/Births etc. 150
(vi)
Religious ceremonies 150
Total advance during the year for two or more purposes should not exceed
Rs.1,000 per family. However, if the security of gold or silver ornaments is
offered the advance may be allowed upto Rs.2,000 without any purpose‑wise
ceiling.
The above scale of finance is applicable in respect of States having
Risk Fund Scheme. In other States, quantum of loan shall be half of the above,
ceilings.
Other terms and conditions:
(i) The
advance under the scheme shall be treated as an integral part of the earlier
advance and will be granted at the same rate at which original advance is
granted. The repayment of consumption credit will also be linked with the
original advance.
(ii) The maximum period of
repayment under the scheme shall be restricted to 3 years.
(a) Loans
provided by banks to SHGsING0s for on‑lending to SHG/ members of
SHGs/discreet individuals or small groups which are in the process of forming
into SHGs will be reckoned as priority sector lending.
(b) Lending to SHGs is to be
included as a part of bank's lending to weaker sections.
(c) Micro credit provided by
banks either directly or through any intermediary.
The following items within the food and agro‑based, processing
sector would be eligible for classification as priority sector for lending by
banks:
§
Fruit and vegetable processing industry
§
Food grain milling industry
§
Dairy products
§
Processing of poultry and eggs, meat products
§
Fish processing
§
Bread oilseeds, meals (edible), breakfast
foods, biscuits, confectionery (including cocoa processing and chocolate), malt
extract, protein isolate, high protein food, weaning food and extruded/other
ready to eat food products
§
Aerated water/ soft drinks and other processed
foods
§
Special packaging for food processing
industries
§
Technical assistance and advice to food
processing industry
With regard to the size of the units within this sector, it is clarified
that food and agro‑ based processing units of small and medium size with
investment in plant and machinery up to Rs.5 crore would be included under
priority sector lending.
While loans to units satisfying SSI definition may be shown under
advances to SSI, loans to other units should be shown
separately in the half‑yearly statements on priority sector lending.
Loans to software industry with credit limit upto Rs.1 crore from the
banking industry shall be included under priority sector.
Investment in Venture Capital will be eligible for inclusion in priority
sector, subject to the condition that the venture capital funds/companies are
registered with SEBI.
TARGETS FOR PRIOPAY SECTOR LENDING BY
SCHEDULED COMMERCIAL BANKS (EXCLUDING RRBs)
The scheduled commercial
banks are expected to enlarge credit to priority sector and ensure that
priority sector advances constitute 40 percent of net bank credit and that a
substantial portion is directed to the weaker sections.
Within the overall main lending target of 40 percent of net bank credit,
it should be ensured that:
(i) 18 percent of net bank
credit goes to agricultural sector,
(ii) 10 percent of net bank
credit is given to the 'weaker sections' and
(iii) 1
percent of previous year's total advances is given under the Differential Rate
of Interest (DRI) scheme.
(i) Taking
into consideration the fact that ultimate objective of agricultural credit
whether 'direct' or 'indirect' is to help the agricultural production, the
lendings under the 'direct' and 'indirect' categories of agricultural advances
will be clubbed for the purpose of computing performance of banks vis‑a‑vis
the sub‑target of 18 percent.
(ii) However,
to ensure that the focus of the banks on the direct category of agricultural
advances does not get diluted; the lendings under the indirect category should
not exceed one‑fourth of the agricultural sub target of 18 percent, i.e.
4.5 percent of net bank credit.
(iii) Advances
under the 'indirect' category in excess of 4.5 percent of net bank credit would
not be reckoned in computing performance under the sub‑target of 18
percent. However, all agricultural advances under the categories 'direct' and
'indirect' will be reckoned in computing performance under the overall priority
sector target of 40 percent of the net bank credit.
In order to ensure that credit is available to all segments of the SSI
sector, banks should ensure that
(a) 40
percent of the total credit to small
scale industry goes to the
cottage industries, khadi & village industries, artisans and tiny
industries with investment in plant and machinery upto Rs. 5 lacs;
(b) 20
percent of the total credit to small scale industry goes to SSI units with
investment in plant and machinery between Rs.5 lakhs and Rs.25 lakhs; and
(c) The remaining 40 percent
goes to other SSI units with investment exceeding Rs.25 lakhs.
(i) It
should be ensured that not less than 40 percent of the total advances granted
under DRI scheme go to scheduled caste/scheduled tribes.
(ii) At
least two third i.e. 60, percent of DRI advances should be granted through
rural and semi‑urban branches.
Under the DRI Scheme, financial assistance is provided at concessional
rate of interest (4 percent per annum)
to selected low income
groups, for productive endeavours.
(i) In
order to ensure that more under‑privileged sections in the priority
sector are given proper attention in the matter of allocation of credit, it
should be ensured that the advances to the weaker sections reach a level of 25
percent of priority sector advances or 10 percent of net bank credit.
(ii) The weaker sections
under priority sector include the following:
(a) Small
and marginal farmers with land holding of 5 acres and less and landless
labourers, tenant farmers and share
croppers.
(b) Artisans,
village and cottage industries where individual credit limits do not exceed
Rs.50,000/-
(c) Beneficiaries
of Swarnjayanti Gram Swarojgar Yojana (SGSY).
(d) Scheduled
Castes and Scheduled Tribes
(e) Beneficiaries
of Differential Rate of Interest (DRI) scheme
(f) Beneficiaries
under Swarna Jayanti Shahari RojgarYojana (SJSRY)
(g) Beneficiaries
under the Scheme for Liberation and Rehabilitation of Scavangers (SLRS).
(h) Advances
to Self Help Groups.
SGSY Scheme is operative in rural areas since April 1999 and has
replaced IRDP, TRYSEM, DWCRA, SITRA, GKY and MWS schemes. The scheme is funded by
the Centre and the States and is implemented by Commercial Banks, Regional
Rural Banks and Co‑operative Banks. Other financial institutions,
Panchayati Raj Institutions, DRDAs, NG0s and Technical Institutions are
involved in the planning, implementation and monitoring of the scheme.
The Scheme covers all aspects of self‑employment such as
organisation of the poor into Self Help Groups, training, credit, technology,
infrastructure and marketing. It aims at establishing a large number of micro enterprises
in the rural areas. The objective is to bring the assisted poor families
(Swarozgaris) above the poverty line by ensuring appreciable sustained income
over period of time. This is to be achieved by inter alia organising the rural
poor into Self Help Groups (SHGs) through the process of social mobilisation,
their training and capacity building and provision of income generating assets.
The assisted poor families can be either individuals and groups and would
be selected from Below Poverty Line (BPL) families by a three member team
consisting of Block Development Officer, Banker and Sarpanch.
The focus of the scheme would be on the vulnerable sections of the rural
poor. SC/ST will account for at least 50%, Women 40% and the disabled 3% of
those assisted.
Training need of 'Swarozgaris' has to be ascertained with reference to
Minimum Skill Requirement (MSR). Swarozgaris processing skills will be put
through basic orientation programme which includes elements of book keeping,
knowledge of market, identification and approval, acquaintance with product
costing, product pricing, familiarisation with project financing by banks and
also basic skills in the key activity identified.
The focus of the scheme should be on cluster based key activities.
Assistance, however, is not prohibited for other activities. The activity
clusters would be in geographic clusters of neighbouring villages within
reasonable radius.
The SGSY Committee selects about 10 activities per block. But, focus
should be on 4‑5 key activities, which are identified for training and
micro enterprise development in a cluster approach for larger number of groups.
Care should be taken that the market is either readily available or there is a
potential for market creation for the products.
Farm activities which are assisted include minor irrigation such as open
dug well/bore/tube-well/lift irrigation/check dam etc. Non farm activities
include those activities that result in the production of goods/services that
have ready market.
Self‑Help
Groups (SHGs)
SHGs shall be organised by Swarozgaris drawn from the BPL list approved
by Gram Sabha. SHG may be an informal group or registered under Societies Act,
State Co‑operative Act or as a partnership firm. Loan cum subsidy may be
extended to individuals in a group or to all members in the group. The other
features of SHGs are as follows:
§
Half the group formed a block level should be
exclusively women groups.
§
A SHG may consist of 10‑20 persons. In
difficult areas this number may vary from 5‑20.
§
All members of the group should belong to BPL
families. In exceptional cases upto a maximum by 30% of members may be take
from families marginally above the poverty line.
§
There should not be more than one member from
the same family in a group and also a
person should not be member of more
than one group.
§
BPL families must actively participate in the
management and decision making.
§
The group should operate a group account
preferably in their service area bank branch.
§
The group should maintain basic records such as
minute book, attendance register, loan register, general ledger, cash book,
bank pass book and individual pass books.
§
In case of disabled persons, the group formed
should normally be disability specific.
§
Sub groups within the large group may be
considered for financing by the banks under the SGSY.
SHGs in existence for about six months having potential of a viable
group can receive the Revolving Fund from DRDA and banks as cash credit
facility. Subsidy may be released by DRDAs equivalent to the group corpus with
a minimum of Rs.5000/‑ and a maximum of Rs.10,000 linked with bank
credit. Successful groups could be considered for sanction of further doses of
subsidy fund up to a maximum of Rs.20,000/‑ inclusive of previous doses
linked with bank credit. The subsidy of Rs.20,000/‑ released by DRDA will
be adjusted against the loan at the end of cash credit period.
Size of the loan comprising term loan and working capital depends on the
nature of the project without any ceiling on the project cost. Disbursement
upto Rs.10,000/‑ under ISB sector may be made in cash where a number of
items are to be bought.
Loans are sanctioned in the name of group and the group stands as
guarantee to the bank for repayment.
Small doses of multiple credit may be given to asset less/skill less
people who are poorest of the poor, so that, they do not fall into debt trap.
General category : 30% of project cost limited to
Rs.7500/-
SC/ST Category : 50% of the project cost limited to
Rs.10,000
Groups : 50%
of the project cost subject to per capital subsidy of Rs.10,000 or Rs.1.25
lakhs
Whichever
is less.
There will be no monetary limit on subsidy for irrigation projects.
Banks should not charge interest on the subsidy amount. Subsidy will not be
allowed if the loan is fully repaid before the prescribed lock in period.
Individual loans upto Rs.50,000 : Assets created out of bank loan to be
hypothecated as primary security.
and group loans upto Rs.5 lakhs
mortgage of land/third party
guarantee shall be taken if no movable
assets
are credited.
Loans beyond the above limits : In addition to primary security as
above, suitable margin money/other
Collateral
security in the form of insurance policy; marketable
Security/deeds
of other property etc.
Loans under the scheme will carry interest as per the directives on
interest rates issued by RBI from time to time.
Insurance cover is available for assets/live stock bought out of the
loan. Swarozgaris are covered under the Group Insurance Schemes as per SGSY
guidelines. Maximum age limit at the time of sanction is 60 years.
All SGSY loans are treated as medium term loans with minimum repayment
period of five years. There will be a moratorium on repayment of loans during the
gestation period. Repayment instalment is fixed considering incremental net
income, principal amount of loan, interest and the repayment period.
The repayment period for various activities under SGSY can he
categorised into 5, 7 and 9 years depending on the project. The corresponding
lock‑in‑period would be 3, 4 and 5 years respectively
SJSRY which has replaced NRY, UBSP and PMIUPEP schemes is in operation
w.e.f. December 1997 in all urban towns in India.
SJSRY seeks to provide gainful employment to the urban poor (living
below the urban poverty line) unemployed or under‑employed, through
setting up of self‑employment ventures or provisions of wage employment.
SJSRY consists of following two special schemes:
(a) The Urban Self‑Employment
Programme (USEP),
(b) The Urban Wage
Employment Programme (UWEP).
There are further two components of USEP scheme
(a) Urban
SeVFmploym4Pnt Programme (USEP)
The scheme provides "stance to individual urban poor beneficiaries
for setting up gainful self‑employment ventures. The salient features of
the scheme are as follows:
(i) Scheme
covers under‑employed and unemployed urban youth and who has passed 9th
standard and whose family annual income is below the poverty line.
(ii) Project up to
Rs.50,000/‑ to be financed by Bank.
(iii) 15% subsidy (subject to
a maximum of 7500/‑ per beneficiary) to be provided by the Government.
(iv) Margin money would be 5%
of the project cost.
(b) Development of Women and
Children in Urban Areas (DWCUA,)
Special incentives are given to urban poor women who decide to set up
self-employment ventures in a group, suited to their skill, training, aptitude
and local conditions. The group should consist of at least 10 urban poor women.
The group will be entitled to a subsidy of Rs.1,25,000/‑ or 50% of the
project cost, whichever is less.
(a) An
entrepreneur eligible under the self‑employment scheme can take a
composite loan from a bank and this loan and group loans upto Rs.3 lakh would
not require a collateral/guarantee.
Besides margin as also the subsidy by the Government, the borrower would
hypothecate/mortgage/pledge to the bank the assets created out of bank loan.
(b) Compulsory training and
other entrepreneurial development assistance will be provided by the
Government.
(c) Loans under the scheme
will carry interest as per the RBI's directive on interest rates issued from
time to time.
(d) A defaulter to a
bank/financial institution is not eligible for assistance under the scheme.
(e) The
percentage of women beneficiaries under the SJSRY shall not be less than 30%. A
special provision of 3% has to be made for the disabled. The benefit of scheme
must go to SC/ST in the proportion of their strength in the local population.
The objective of PMRY is to provide employment opportunities to the
educated unemployed youth by way of bank credit and Government subsidy. The
salient features of the scheme are as under:
§
All educated unemployed youth between 18 and 35
years of age in of general, in all areas except north‑east Region states
are eligible. The upper age limit in NE states (Assam, Mizoram, Manipur,
Tripura, Nagaland, Arunachal Pradesh and Meghalaya) is 40. The upper age limit
in the case of SC/ST/Ex‑serviceman, physically handicapped and women, in
all areas, is 45 years.
§
Minimum educational qualification prescribed is
VIII Std. (passed) but preference shall be given to those who have received
training in govt. recognised/approved institutions like ITI for a period of
atleast6months.
§
The beneficiary should be a permanent resident
of the District for a minimum period of 3 years.
Family income of the beneficiary from all sources should not exceed
Rs.40,000/-per annum and income of parents should also not exceed Rs.40,000/‑
per annum. Family for this purpose means the beneficiary and spouse. In seven
states of NE Region, the family income of each beneficiary along with his/her
spouse and the parent should not exceed Rs.40,000/‑ per annum.
All economically viable activities (including agriculture and allied
activities but excluding direct agricultural operations like raising crop,
purchase of manure etc. are covered under PMRY for grant of financial
assistance.
§
Business sector: Upto Rs.1.00 lac
§
Other than business sectors: Upto Rs.2.00 lacs
§
In case of partnership concerns: Rs.1.00 lac
per partner for business sector and Rs.2.00 lacs per partner for other
activities subject to a maximum of Rs. 10.00 lacs in both cases. RBI has
clarified that assistance under PMRY cannot be extended to persons jointly in
the absence of Partnership Deed.
Amount of subsidy shall be restricted to 15% of project cost subject to
a maximum of Rs.7,500/‑ per beneficiary in all States except NE States
where the maximum subsidy shall be Rs.15,000/‑
Margin money shall vary from 5% to 16.25% of the project cost. However,
in no case subsidy and margin money shall exceed 20% of the project cost. In NE
States, the margin money stipulation is 5% to 12.5%.
Assets created out of amount advanced shall be taken as security. Banks
may seek collateral security in addition to assets created for projects more
than Rs.1 lakh for business and service sectors and for projects more than Rs.2
lakh in other sections. In case of partnership projects, exemption from
collateral security is limited to Rs. 1 lakh per person.
The interest shall be charged as per the slab rates advised from time to
time.
Repayment of loan shall be made within a period of 3 to 7 years after an
initial moratorium decided on case to case basis.
Under industry sector, training will be given for a period of 15 to 20
working days while under service and business sectors training period may range
from 7 to 10 working days. If a borrower has undergone equivalent or higher
entrepreneurship development training conducted by reputed institutions or
bank, he may be exempted from training and in such cases General Managers of
DIC concerned will issue a certificate.
If the borrower expires during the pendency of the loan, the amount
outstanding is permitted to be transferred in the name of legal heirs or near relative
or third party willing to take over the liability as well as to continue the
activity even if they do not satisfy eligibility norms. If not, necessary
recovery measures shall be initiated.
If the borrower desires to clear the liability before the repayment
schedule fixed, banks may rephrase the repayment schedule. However, rephasement
must cover a minimum period of 3 years from the grant of loan so as to make the
borrower eligible for subsidy.
The scheme is meant to liberate scavengers and their dependants from the
existing hereditary occupation. It covers all scavengers including SCIST in urban/semi‑urban/rural
areas. Local committees will help in identification of scavengers.
Maximum loan amount shall be restricted to Rs.32,500 excluding subsidy
of Rs.10,000 and margin of Rs.7,500. State Scheduled Caste Development Board
shall provide subsidy equivalent to 50% of the project cost subject to a
maximum of Rs.10,000. Further, margin money assistance shall also be provided
by the Board limited to 15% of the project cost or Rs. 7,500 whichever is lower
at interest rate of 4%.
Rate of interest upto a loan of Rs.6,500 shall be as per DRI Scheme.
Loans above Rs.6,500 shall attract usual interest rate applicable to priority
sector advances.
Repayment of the loan shall be made within a period of 3 to 7 years
(including repayment holiday upto 6 months) in monthly or quarterly instalments
based on the income generation.
CREDIT FACILITIES TO MINORITY COMMUNITIES1
All commercial banks, both in public and private sector, have been
advised to ensure smooth flow of bank credit to minority communities and for
this purpose they have been advised to set 'up a special cell.
Sikhs, Muslims, Christians, Zoroastrians
Buddhists have been notified as
minority communities by the Government of India, Ministry of Welfare.
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 are advised to furnish data on credit assistance provided to
members of minority communities to RBI and Government, of India.
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 firm may be treated advances granted to minority
communities.
NATIONAL MINORITIES DEVELOPMENT AND FINANCE
CORPORATION (NMDFC)
NMDFC, establish in September 1994, works as an apex body and
channelises its funds to promote economic and development activities for the
backward sections amongst the, minorities through the, State Minority Finance
Corporation of the respective State/Union Territory Governments.
Under the Margin Money Scheme of NMDFC, bank finance could be granted up
to 60% of the project cost. Remaining cost is shared by NMDFC, the state
channelising agency and the beneficiary in the proportion of 25%, 10% and 5%
respectively. While extending bank finance, banks should bear in mind the
guidelines and instructions issued by RBI from time to time.
[R1] Vide RPCD.
PLAN.BC.No. 93/04.09.01/2002‑03, dt. 29.4.2003.
[R2]
RPCD.PLNFS.BC. No. 83/06.12.05/2000‑01,
dt. 28.4.2001.
[R3] RPCD.
PLNFS.No. BC.44/06.12.05/2003‑04, dated 4.11.2003.
[R4] Banks may with
the approval of their Boards, extend loan for construction of houses, upto
Rs.10 lakhs in rural and semi‑urban areas, vide RPCD.PLNFS.BC.No.
92/06.11.01/2002‑03, dt. 29.4.2003
[R5]
See Master Circular No. RPCD.SP.BC. No.
15/09.01.01/2003‑04 dated 29.7.2003.
[R6] Master
Circular No. RPCD.No. SP.BC.16/09.16.01/2003‑04 dt. 7.8.2003.
[R7] Master
Circular No. RPCD.No. PLNFS.BC.25/09.04.01/2002‑03, dt. 14.10.2002.
[R8] Master
Circular No. RPCD.No.SP.BC.17/09.09.01/2002‑03 dt. 12.9.2002.