Have you heard of a "reservation policy" in bank lending? The Reserve Bank of India (RBI) seems to be moving towards this direction.
The central bank, in a recent letter (dated February 4) to the bank chief executive officers, said: "We shall be glad if you please initiate suitable steps to ensure enhancement of flow of credit to minority communities as per instructions issued by us from time to time."
The apex bank has also asked banks to monitor regularly progress in regard to credit flow to minority communities and report the relevant data on a half-yearly basis.
The lead banks of all the 44 minority concentrated districts have been advised by the central bank to initiate steps to increase credit flow to minorities in the identified districts in January.
The RBI has also informed the National Commission for Minorities about the measures initiated to enhance flow of credit to minority communities. The central bank had done a quick study conducted in the 44 identified districts.
The findings of the study were discussed with the heads of the concerned operational departments of a few major banks at meetings held on September 24 and 26 last year.
A RBI letter to the National Minority Commission says that the banks were willing to extend credit under the self-help group (SHG)-bank linkage programme to minority communities.
The banks suggested that the National Bank for Agriculture and Rural Development, non-government organisations and state minorities commission may be actively involved in the formation of SHGs and their linkage to banks.
The state minorities commission/finance corporations are also urged by the banks to assist them in identifying/sponsoring eligible candidates for lending for viable activities and also in recovery of dues, to curb the non-performing asset levels.
Banks also expressed that the state minorities commission and NGOs can provide inputs, necessary technology and marketing support to the economic activities done by the minority communities with banks' assistance.
