Reserve Bank of India
Legislation UpdatesNotifications

   

On 02-08-2022, the Reserve Bank of India (‘RBI') issued Master Circular on Credit Facilities to Minority Communities, consolidating all circulars issued on the subject till date.

It lays out details about the credit facilities available to the minority communities, and how the same has to be made available to them.

Credit Facilities to Minority Community

  1. The benefits flowing from various Government sponsored schemes, Scheduled Commercial Banks (‘Bank') are advised to keep the flow of bank credit smooth to minority communities.

  2. A list of 121 minority concentration districts, having at least 25% minority population, is forwarded by the Government, excluding the state/UTs where minorities are in majority.

  3. The banks have to specially monitor the credit flow of these 121 districts, ensuring a fair and equitable portion of the credit within the overall target of the priority sector.

  4. According to the Master Direction on Priority Sector Lending dated 04-09-2020, a sub target of 11.5% of Adjusted Net Bank Credit or Credit Equivalent amount of Off- Balance Sheet Exposures, whichever is higher, as on March 31 of the previous year, has been mandated for FY: 2022 —2023 for lending to weaker sections which includes, among others, persons from minority communities.

Definition of Minority Communities

  1. These communities have been notified as minority by the Government of India, Ministry of Minority Affairs:

    • Sikhs

    • Muslims

    • Christians

    • Zoroastrians

    • Buddhists

    • Jain

  2. In a partnership firm, majority of partners being of the specified community, advances granted to such firms will be treated as advances granted to such community.

  3. 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.

Creation of Special Cell and designating an exclusive Officer

  1. A special cell has to be set up by each bank, having a Nodal Officer, holding the rank of DGM/ AGM, who will ensure smooth credit flow to minority communities.

  2. Responsibilities of the Nodal Officer:

    • Look after credit flow problems

    • Publicize various programmes of bank credit

    • Prepare suitable schemes

    • Arrange group meetings for formulation of schemes

  3. The Officer should be attached to the Lead Bank set up at the district level so that he can receive necessary guidance from the Lead District Manager.

  4. The name, designation, and address of the Nodal officer and officer appointed by lead banks in the identified districts to take after the problems of a minority community should be furnished by the banks to the National Commission for Minorities, a copy which should be furnished to the Chief General Manager, Financial Inclusion and Development Department, RBI.

Role of Lead Banks

  1. Lead Banks will have to exercise their proactive role, ensuring that the poor and illiterate have access to bank credit for taking up productive activities

  2. In the 121 identified districts, the Lead Banks may involve State Minority Commission/ Finance Corporation in the extension work: creating awareness, identification of beneficiaries, preparation of viable projects, provision of backward and forward linkages.

  3. Lead Banks can also collaborate with District Development Managers of NABARD/ NGOs/ Voluntary Organizations to reach the poor through Self Help Groups (‘SHG').

  4. The Convenor Banks of the District Consultative Committees (‘DCC'), District Level Review Committees (‘DLRCs) and the State Level Bankers Committees (SLBCs) should ensure that steps are taken to facilitate credit flow and the progress is reviewed at the meetings.

Advances under DRI Scheme

  1. Under this scheme, loans can be routed through State Minority Finance/ Development Corporation.

  2. Banks should ensure proper maintenance of the register to evolve timely sanction and disbursement of loan applications.

Monitoring

  1. Data on credit extended to borrowers should be furnished to RBI and to the Government, Ministry of Finance and Ministry of Minority Affairs, on half yearly basis, at the end of March and September every year.

  2. The progress made in credit flow should be reviewed regularly at the meetings of the DCC and the SLBC.

  3. The Lead Banks should furnish the relevant extracts and minutes of the meetings of the DCCs and of the SLBCs to the Union Ministry of Finance and to the Ministry of Minority Affairs on a quarterly basis.

Training

  1. To ensure that the bank staff and officers have a proper perspective of the various programmes for the welfare of minorities, banks should include suitable lecture sessions as part of all training programmes like induction courses, programmes on rural lending, financing of priority sectors and poverty alleviation programmes.

  2. Lead Banks should motivate the staff posted to identified districts through proper training to assist the minority community.

  3. Lead banks should train the staff of the banks regarding micro credit/ lending to SHGs with the help of DDMa pf NABARD, by conducting workshops.

  4. Lead Banks should organize Entrepreneur Development Programmes so that the members of such group in these areas are enabled to derive the benefit of various programmes being financed by the banks.

Publicity

The anti-poverty programmes of the Government regarding credit facilities available from banks should be publicized through:

  • Print media

  • TV channels

  • Participation/ setting of stalls

National Minorities Development and Finance Corporation (NMDFC)

  1. It is the apex body and channelizes its funds through the State Minority Finance Corporation of each State/ Union Territory.

  2. It promotes economic and development activities for the backward sections amongst the minorities.

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

  1. The objective 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, including the minority group.

  2. This programme should be implemented by the Central Ministries/ Departments in minority concentration districts.

  3. All Scheduled commercial banks are required to ensure that the minority communities receive an equitable portion of credit.

Reserve Bank of India
Legislation UpdatesNotifications

   

On 01-08-2022, the Reserve Bank of India (‘RBI') issued Master Circular — Credit facilities to Scheduled Castes (‘SC') & Scheduled Tribes (‘ST') to help the SCs/ STs by increasing self-employment, generate income to make themselves self- liquidating and help in easy loan sanctioning.

The Master Circular consolidates the circulars issued by RBI on the subject till date.

Planning Process

The Banks should follow these measures to set up their advances to SCs/STs:

  1. The District Consultative Committees should continue to be the principal mechanism of co-ordination between banks and development agencies.

  2. Banks should establish a closer working relationship with the District Industries Centres to promote self-employment.

  3. Credit planning should be designed, at the block level itself, in such a way that bank schemes are in the favour of them and they participate in a larger flow of credit ensuring self-employment.

  4. Banks should periodically keep a check that loans are sanctioned in time, are adequate and production oriented and they generate incremental income to make them self- liquidating.

  5. Villages having sizeable population of SC/ ST communities should be specially chosen.

Role of Banks

  1. The staff of the Banks should help the customers to fill in forms, complete formalities to help them to get credit facility within a stipulated time.

  2. Banks should spread awareness through circulating brochures and visits by the field staff about the salient features of the scheme and its advantages.

  3. The bank should also conduct exclusive meetings to understand credit needs and then incorporate them in the credit plan.

  4. Banks should not insist on deposits while considering loan applications under poverty alleviation schemes/ self-employment programmes. It also has to be ensured that subsidy is not held back while releasing the loan component till full repayment of bank dues.

  5. The Banks should enable the National Schedule Tribes Finance & Development Corporation (‘NSFDC') and National Scheduled Castes Finance & Development Corporation (‘SCDC') to achieve their desired objectives.

  6. Rejection of loan applications to be done at the next higher level of Bank and reasons should be clarified as to why the application has been rejected.

Reservation under major Centrally Sponsored Schemes

Under these schemes, credit is provided by banks, and subsidies are received through Government agencies where RBI monitors the credit flow.

Centrally Sponsored Schemes:

  1. Deendayal Antyodaya Yojana – National Rural Livelihoods Mission (‘DAY-NRLM'):

  2. Differential Rate of Interest (‘DRI') Scheme: ensures that persons belonging to SCs/STs also derive adequate benefit under the DRI Scheme, banks have been advised to grant eligible borrowers belonging to SCs/STs such advances to the extent of not less than 2/5th (40 percent) of total DRI advances.

Guidelines on Credit Enhancement Guarantee Scheme for Scheduled Castes (‘CEGSSC')

CEGSSC was launched on 06-05-2015 with the objective of promoting entrepreneurship amongst the Scheduled Castes (SCs), by providing credit enhancement guarantees to Member Lending Institutions (‘MLI'), which extend financial assistance to these entrepreneurs. IFCI Ltd is its Nodal Agency. The amount of guarantee covered under this programme ranges from Rs. 0.15 cr to a maximum of Rs. 5.00 cr. The tenure is up to a maximum of 7 years or repayment period.

Monitoring and Reviewing

  1. The monitoring and reviewing of such Banks will be done at their Head Offices where a special cell will be set up for the same purpose.

  2. Responsibilities of the special cell:

    • Ensure implementation of RBI guidelines

    • Responsible for collection of relevant data from the branches of the banks

    • Submission of the returns to RBI and Government

  3. Every Head Office of the bank has to review the credit extended to SCs/ STs on the basis of returns. Any gap or variation in credit flow should be reported to the Board.

  4. Bank should also review the measures taken to enhance the flow of credit to the borrowers on a quarterly basis. Progress made should also be reviewed.

  5. State Level Banker's Committee (‘SLBC') has to invite the representative of National Commission for SCs/ STs to attend SLBC meetings. The Convenor bank may also invite representatives of NSFDC and SCDC to attend SLBC meetings.

Reporting Requirements

Data/Statements on advances has to be reported quarterly and yearly to RBI, Financial Inclusion and Development Department, Statistics Division, Central Office, within 15 days and 1 month, respectively from the date of ending of each quarter and financial year.

Case BriefsHigh Courts

Delhi High Court: Prateek Jalan, J., reiterated the position of law laid down in the decision of Vandana Tyagi v. GNCTD, [WP (C) 1103 of 2019, decided on 07-01-2020.

Petitioner sought direction upon the respondent/State Bank of India [Bank] to release an amount of Rs 30,000 per month to him from the bank account of his incapacitated nephew, Mr Ajit Kumar Singh [AKS].

Petitioner submitted that AKS had been bedridden and incapacitated as he was suffering from acute ischemic strokes since 2018 and his health worsened in November 2020. It was also stated that an amount of ₹30,000 per month would be required so as to meet AKS’s daily and medical expenditure, including doctor’s fees, medicines, food, therapist, nurse etc.

Petitioner being the paternal uncle of AKS stated that he had been taking care of his nephew and had been acting as his guardian, in addition to maintaining his own family, but was not in a position to financially sustain his nephew indefinitely, and meet his medical expenditure as well.

Bank denied the request for withdrawal of the said amount from the bank account of AKS on the ground that there was no policy that allowed such withdrawals, even by family members in cases of medical emergencies.

Instant petition was filed in view of the above circumstances.

Mr Ramesh Singh, Standing Counsel for GNCTD drew the Court’s attention to Clause 5.7 of the Master Circular on Maintenance of Deposit Accounts – UCB dated 01-07-2009 [Master Circular] issued by RBI which was in respect to  “Operation of Bank Accounts by Old/Sick/Incapacitated Customers”

On examination by the medical board it was found that AKS was virtually in a comatose state and would not be able to indicate the person who would be entitled to operate his bank account in terms of Clause 5.7.3 of the Master Circular.

In view of the above stated circumstances and facts, reliance was placed on the decision of Delhi High Court in Vandana Tyagi v. GNCTD, [WP (C) 1103 of 2019, decided on 07-01-2020] which laid down guidelines that may be used to deal with situation such as the present one where a person is unable to discharge his/her functions with respect to his/her assets.

On 04-03-2021, this Court prima facie had opined that the aforesaid decision was applicable to the present matter.

In view of the facts and circumstances of the present case, Bench held that the guidelines issued in Delhi High Court’s decision of Vandana Tyagi v. GNCTD, [WP (C) 1103 of 2019, decided on 07-01-2020] will be applicable to the present case.

Bench was satisfied with the report from the Medical Board that AKS was in a comatose state and incapable of operating his bank account himself or giving necessary directions for this purpose. Tehsildar’s report corroborated the information placed on record.

AKS and his wife had discord in their marital relations and the same was a subject matter of legal proceedings wherein they mutually agreed to divorce upon certain terms and conditions. His adult son stated vide an affidavit that he had no objection to the petitioner being appointed as legal guardian of AKS.

In Court’s opinion, neither AKS’s spouse nor his children were in a position to take care of him and also they had no objection to petitioner taking on the role of guardian to AKS.

High Court held that petitioner shall be appointed at the guardian of AKS for the purpose of withdrawal of a fixed monthly amount from the savings account of AKS, subject to safeguards contained in the guidelines incorporated in Vandana Tyagi case.

Court directed that the petitioner may be permitted to withdraw Rs 20,000 per month from AKS’s account.

  • Bank will file the statement of accounts of the aforesaid account before the Registrar General of this Court every three months to monitor the aforesaid aspect.
  • Petitioner will also file a statement of accounts before the Registrar General every three months stating the items of expenditure with regard to the aforesaid amount of ₹20,000
  • In the event, the petitioner misuses his power or misappropriates, siphons or misutilizes the assets of AKS or fails to utilize the assets in AKS’s best interests, the Court would have the power to remove him as the guardian and appoint another person in his place.
  • Petitioner shall intimate his appointment to the Director, Department of Social Welfare, GNCTD
  • A representative of the Department of Social Welfare, GNCTD, shall visit the residence of the petitioner at least once every quarter, and make a report regarding the condition of AKS, which will be placed before the Director, Department of Social Welfare, GNCTD
  • In case any other relative or a next friend of AKS finds that the petitioner is not acting in the best interests of AKS, such person will also have the locus to approach the Court for issuance of appropriate directions and/or for removal of the petitioner as the guardian.
  • In case, the petitioner wishes to move AKS to another state or even to another country for the purposes of securing better medical treatment for him, he would approach the Court for necessary permission before undertaking such an exercise.

In view of the above terms, petition was disposed of.[Bhim Singh v. AGM State Bank of India, 2021 SCC OnLine Del 1552, decided on 08-04-2021]


Advocates before the Court:

For the Petitioner: Dhruv Dwivedi, Advocate

For the Respondents: Rajiv Kapur and Akshit Kapur, Advocates for R-1 and R-2.

Ramesh Singh, Senior Advocate, Amicus Curiae with Tara Narula, Advocate

Business NewsNews

This master circular consolidates and updates the requirements/obligations with regard to Prevention of Unauthorized Trading by Stock Brokers prescribed by the following circulars:

A. CIR/HO/MIRSD/MIRSD2/CIR/P/201 7/108 dated September 26, 2017

B. CIR/HO/MIRSD/MIRSD2/CIR/P/2017/124 dated November 30, 2017

C. CIR/HO/MIRSD/MIRSD2/CIR/P/2018/109 dated January 11, 2018

II. SEBI in the past has taken several steps to tackle the issue of “Unauthorized Trades” viz Periodic Running Account Settlement, Post transactions SMS/email by exchanges/Depositories, Ticker on broker/DP websites etc. It was observed that in spite of measures taken, a considerable proportion of investor complaints is of the nature of “Unauthorized Trades”

III. To further strengthen regulatory provisions against unauthorized trades and also to harmonize the requirements across markets, it has now been decided that all brokers shall execute trades of clients only after keeping evidence of the client placing such order, which could be, inter alia, in the form of:

a. Physical record written & signed by client,

b. Telephone recording,

c. Email from authorized email id,

d. Log for internet transactions

e. Record of messages through mobile phones,

f. Any other legally verifiable record.

When a dispute arises, the broker shall produce the above mentioned records for the disputed trades. However for exceptional cases such as technical failure etc. where broker fails to produce order placing evidences, the broker shall justify with reasons for the same and depending upon merit of the same, other appropriate evidences like post trade confirmation by client, receipt/payment of funds/ securities by client in respect of disputed trade, etc. shall also be considered.

IV. Further, wherever the order instructions are received from clients through the telephone, the stock broker shall mandatorily use telephone recording system to record the instructions and maintain telephone recordings as part of its records.

V. The Brokers are required to maintain the records specified at Para III above for a minimum period for which the arbitration accepts investors’ complaints as notified from time to time currently three years. However in cases where dispute has been raised, such records shall be kept till final resolution of the dispute.

VI. If SEBI desires that specific records be preserved then such records shall be kept till further intimation by SEBI.

VII. The earlier circulars on the same subject mentioned in Para 1 of this Master Circular stand rescinded.

VIII. This master circular shall continue to be effective from 1st April 2018.

IX. The Stock Exchanges are directed to:

a. bring the provisions of this circular to the notice of the Stock Brokers and also disseminate the same on their websites.

b. make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above directions in coordination with one another to achieve uniformity in approach.

c. communicate to SEBI, the status of the implementation of the provisions of this circular in their Monthly Development Reports.

X. This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 to protect the interest of investors in securities and to promote the development of and to regulate the securities market.

Securities and Exchange Board of India

[CIRCULAR SEBI/HO/MIRSD/DOP1/CIR/P/2018/54]