Even though the Reserve Bank of India (RBI) had asked all scheduled banks to submit an elaborate report on lending to minorities in July 2006, they have found the exercise extremely cumbersome. Banking sources said the central bank was yet to work out the finer modalities and banks were expecting more detailed guidelines.“We have been compiling data on lending to minorities, but these are based on the earlier guidelines. We are awaiting more clarity,” a public sector banker said. The banking regulator had issued a circular to all banks in July 2006 asking them to provide quarterly and half-yearly information on credit facilities to minorities. Sikhs, Muslims, Christians, Zoroastrians and Buddhists have been notified as minority communities by the government.In February, the RBI re-issued the circular with many banks failing to furnish half-yearly data.In fact, finance ministry sources said, the lending pattern to minorities too would play a role in determining the performance-based incentives for bank chairmen.Several leading banks said that they had taken steps following the RBI missive. They also said appropriate action would be taken once final detailed guidelines are issued.It is learnt that the central bank, in fine-tuning the modalities, may even define a stage when minorities graduate and become ineligible for the special treatment. “It is necessary to specify when special status can be lifted,” a banker said. To monitor the performance of banks in providing credit to the specified minority communities, the RBI said that data on credit assistance provided to members of minority communities should be furnished not only to the central bank, but also to the finance and social welfare ministry on a half yearly basis — in March and September every year. The government also wanted to review the credit flow to the minority communities on a regular basis. It may be noted that a few months ago, Prime Minister Manmohan Singh expressed his concern over the issue of low credit flow to minority communities.The RBI circular clearly states that both public and private sector banks must ensure smooth flow of credit to these communities. It also calls upon the scheduled banks to set up a special cell for this purpose.
