RBI issues Master Circular on credit facilities to Scheduled Castes and Scheduled Tribes: what banks must do
RBI has issued its Master Circular consolidating instructions to banks on credit facilities to Scheduled Castes and Scheduled Tribes. It covers credit planning, help with applications, no insistence on deposits, rejection of loan applications only at the next higher level, the 40 per cent share under the DRI scheme, the credit guarantee scheme for SC entrepreneurs, and monitoring through a special cell at Head Office.
Key facts
- In force
- Master Circular dated 1 October 2026
- Who it affects
- Scheduled Commercial Banks including Small Finance Banks, lead banks and SLBC convenors, SC/ST borrowers and SC entrepreneurs
- Source
- RBI Master Circular RBI/2026-27/272, FIDD.CO.GSSD.BC.No.11/09.09.001/2026-27 dated 1 October 2026 ↗
- Section
- FEMA & RBI
- Published
- 1 October 2026
In 30 seconds
- Master Circular RBI/2026-27/272, FIDD.CO.GSSD.BC.No.11/09.09.001/2026-27, is dated 1 October 2026 and addressed to all Scheduled Commercial Banks including Small Finance Banks.
- It consolidates the circulars issued by RBI on the subject till date, listed in its Appendix.
- Banks should not insist on deposits for loans under Government sponsored poverty alleviation / self-employment programmes, and should not hold back the subsidy till full repayment.
- Rejection of SC/ST loan applications under government programmes is to be done at the next higher level, not at the branch, with reasons clearly indicated.
- Under the DRI scheme, not less than 2/5th (40 per cent) of total DRI advances should go to eligible SC/ST borrowers.
- Under CEGSSC, IFCI Ltd. gives guarantee cover from ₹0.15 crore to ₹5.00 crore for loans to SC entrepreneurs, for up to 7 years or the repayment period, whichever is earlier.
हिंदी में सार
RBI ने 1 अक्टूबर 2026 को अनुसूचित जाति और अनुसूचित जनजाति को ऋण सुविधाओं पर Master Circular जारी किया है, जो इस विषय के अब तक के सभी सर्कुलरों को एक जगह समेटता है। बैंकों को सरकारी योजनाओं के ऋण पर जमा की माँग नहीं करनी है, सब्सिडी रोकनी नहीं है, और SC/ST आवेदन शाखा के बजाय अगले ऊँचे स्तर पर ही, कारण बताकर, अस्वीकार किया जा सकता है। DRI योजना में कुल अग्रिमों का कम से कम 40 प्रतिशत SC/ST को जाना चाहिए, और CEGSSC के तहत IFCI ₹0.15 करोड़ से ₹5 करोड़ तक की गारंटी देता है।
What the document is
The Reserve Bank of India has issued the Master Circular – Credit Facilities to Scheduled Castes (SCs) & Scheduled Tribes (STs), RBI/2026-27/272, FIDD.CO.GSSD.BC.No.11/09.09.001/2026-27 dated 1 October 2026. It is addressed to all Scheduled Commercial Banks, including Small Finance Banks, and consolidates the circulars RBI has issued on the subject till date; the Appendix lists them, from 1978 onwards. The covering letter does not announce any new requirement — it is a consolidation.
Planning and the branch’s role
- District Level Consultative Committees under the Lead Bank Scheme remain the principal mechanism of co-ordination between banks and development agencies.
- Credit planning at block level should be weighted in favour of SCs/STs, with special bankable schemes for self-employment, and special focus on villages and localities with a concentration of these communities.
- Bank staff may help borrowers fill up forms and complete formalities so that credit is available within a stipulated period from receipt of the application.
- Branches should hold meetings more frequently exclusively for SC/ST beneficiaries.
Three rules on loan handling
| Matter | What the Master Circular says |
|---|---|
| Deposits | Banks should not insist on deposits while considering loan applications from SC/ST borrowers under Government sponsored poverty alleviation schemes / self-employment programmes |
| Subsidy | Applicable subsidy should not be held back till full repayment of bank dues; non-release of subsidy upfront amounts to under-financing |
| Rejection | Rejection of SC/ST loan applications under government programmes should be done at the next higher level instead of at the branch, with the reasons clearly indicated |
Loans sanctioned to State Sponsored Organisations for SCs/STs, for the specific purpose of purchase and supply of inputs and/or marketing of the outputs of their beneficiaries, are eligible for priority sector classification.
Schemes with a share for SC/ST borrowers
| Scheme | Provision |
|---|---|
| DAY-NRLM | Coverage of vulnerable sections such that 50 per cent of these beneficiaries are SCs/STs |
| Differential Rate of Interest (DRI) Scheme | Finance up to ₹15,000 at 4 per cent per annum to weaker sections; not less than 2/5th (40 per cent) of total DRI advances to eligible SC/ST borrowers; the land-holding criteria do not apply to SCs/STs; a housing loan up to ₹20,000 per beneficiary over and above the ₹15,000 for SC/ST members who meet the income criteria |
| Credit Enhancement Guarantee Scheme for Scheduled Castes (CEGSSC) | Launched by the Ministry of Social Justice & Empowerment on 6 May 2015; IFCI Ltd. is the nodal agency issuing guarantee cover to Member Lending Institutions. Guarantee cover from ₹0.15 crore to ₹5.00 crore; tenure up to 7 years or the repayment period, whichever is earlier |
For CEGSSC, the Master Circular describes the eligible borrowers as individual SC entrepreneurs, and registered companies and societies, registered partnership firms and sole proprietorship firms having more than 51 per cent shareholding and management control for the previous 6 months by SC entrepreneurs / promoters / members.
Monitoring and reporting
- A special cell at the bank’s Head Office should monitor the flow of credit to SC/ST beneficiaries, collect data from branches and submit the returns to RBI and Government.
- Any major gap or variation in credit flow on a year-to-year basis should be reported to the Board or any committee to which the Board has delegated powers.
- Measures to enhance credit flow should be reviewed on a quarterly basis.
- Data on advances to SCs and STs is to be reported as prescribed in the Master Direction on Priority Sector Lending, within the stipulated time frames.
What readers should take from it
Banks should check their branch instructions against this single document — in particular the rule on rejection at the next higher level, the DRI share and the Head Office special cell. SC entrepreneurs and firms controlled by them may note that lenders can obtain guarantee cover from IFCI Ltd. under CEGSSC for loans within the range above.
Questions and answers
Does the Master Circular of 1 October 2026 introduce new rules?
The covering letter describes it as a consolidation of the circulars RBI has issued on credit facilities to SCs and STs till date, listed in the Appendix. It does not announce a new requirement.
Can a branch reject an SC/ST borrower’s loan application under a government programme?
The Master Circular says rejection of such applications should be done at the next higher level instead of at the branch level, and the reasons for rejection should be clearly indicated.
What is the SC/ST share under the DRI scheme?
Banks have been advised to grant advances to eligible SC/ST borrowers to the extent of not less than 2/5th (40 per cent) of total DRI advances. Under the scheme, finance is up to ₹15,000 at 4 per cent per annum.
What guarantee is available for loans to Scheduled Caste entrepreneurs?
Under the Credit Enhancement Guarantee Scheme for Scheduled Castes, IFCI Ltd. issues guarantee cover to Member Lending Institutions, from ₹0.15 crore to ₹5.00 crore, for up to 7 years or the repayment period, whichever is earlier.
Can a bank ask for a deposit before sanctioning such a loan?
Banks should not insist on deposits while considering loan applications under Government sponsored poverty alleviation schemes / self-employment programmes from borrowers belonging to SCs/STs.
Published 1 October 2026. Updated 8 October 2026. This report is for general information and is not professional advice. Read the source document before acting on it.