The Reserve Bank of India (RBI) periodically consolidates and updates its regulatory guidelines to ensure banks deliver credit in a structured, inclusive, and resilient manner. The latest frameworks matter now because they address three critical fronts: (i) livelihood promotion through ongoing programs such as DAY-NRLM, while formally closing DAY-NULM, (ii) standardized relief measures for borrowers in calamity-affected areas, and (iii) inclusive credit flows to SCs, STs, and minority communities in line with priority sector lending. These directions not only streamline compliance for banks but also reinforce the alignment between financial sector operations, government-sponsored schemes, and the national agenda of poverty alleviation and financial inclusion.
RBI prescribes a consolidated framework guiding banks on livelihood-linked credit under DAY-NRLM and the concluded DAY-NULM, relief measures in natural calamities, and inclusive finance for SCs/STs and minority communities, aligned with priority sector norms and government-sponsored employment programs.
NRLM guidelines
- DAY‑NRLM remains operational with updated master circulars consolidating instructions on SHG-bank linkage, interest subvention, and credit norms by RBI and program agencies, including cash credit limits and tenure guidance to strengthen women SHG access to affordable finance.
- Banks are advised to sanction at least a minimum cash credit limit of around ₹5 lakh for eligible SHGs with a 5‑year horizon in CCL structures, while ensuring eligibility tagging in CBS for subvention claims and adherence to RBI asset classification norms for NRLM credit portfolios.
- Interest subvention mechanisms provide rate relief subject to compliance with notified caps, claim formats, and auditor certification schedules, with NABARD and program authorities facilitating claim processing for eligible SHG credit bands during specified fiscal periods.
To learn more read: GOVERNMENT SPONSORED SCHEME: DAY-NRLM/ (SGSY)
NULM status and implications
- DAY‑NULM has been concluded as of September 30, 2024, following which RBI withdrew the extant NULM master circulars and related returns for banks effective May 21, 2025, simplifying reporting obligations post-closure.
- Prior NULM bank processes around interest subvention and urban SHG/SEP lending have ceased to require RBI‑mandated returns; any residual settlement or reimbursement must follow closure notifications and bank–scheme instructions where applicable.
- RBI’s public notifications and common person pages may still reference historical NULM content; operative compliance now rests on the withdrawal circular and banks’ updated internal policies reflecting the scheme’s closure.
To learn more read: GOVERNMENT SPONSORED SCHEME: DAY-NULM/ (SJSRY)
Calamity relief directions
- RBI’s Master Directions on Relief Measures by Banks in Areas Affected by Natural Calamities prescribe standardized restructuring, fresh finance, and moratorium support once a calamity is officially declared by the competent state authority, with separate issuances for SCBs and RRBs.
- Short‑term production loans not overdue at the time of the calamity are eligible for restructuring, with moratoria and revised repayment schedules calibrated to damage assessments and state‑administration inputs, and fresh finance enabling restoration of livelihoods.
- Banks must ensure periodic review of implemented measures in severely affected areas, coordinate through SLBC/DLCC fora, and maintain reporting and transparency consistent with the Master Directions’ consolidated provisions and appendices.
Credit to SCs/STs
- RBI issued a 2025 Master Circular consolidating instructions on credit facilities to SCs/STs, emphasizing proactive, sympathetic approaches, simplified processes, and institutional support to national corporations for inclusive credit delivery.
- The framework calls for higher‑level approval of application rejections, upfront release of subsidies under government self‑employment schemes, and monitoring cells within banks to track SC/ST credit flow under SLBC oversight with quarterly reviews.
- Classification, reporting, and targets follow priority sector and weaker‑section norms; banks must ensure transparent data submission and use alternative diligence in lieu of restrictive “no‑due” certificates for government-sponsored schemes.
Credit to minority communities
- RBI’s Master Circular on credit facilities to minority communities directs banks to designate district officers to focus on minority credit, improve outreach, simplify applications, and monitor flows, integrating with Lead Bank planning.
- Classification under weaker sections and PSL applies per RBI PSL Master Directions and FAQs, with self‑declaration in loan applications generally sufficient to classify credit to minorities/SCs/STs under weaker sections for reporting.
- SLBC/DLCC structures should review minority lending progress, identify concentration areas, and ensure corrective measures where gaps persist, aligning with inclusive finance objectives.
Poverty alleviation linkages
- RBI aligns bank lending with government poverty alleviation and employment generation programs such as DAY‑NRLM, PMEGP, MUDRA, and Stand‑Up India through Lead Bank forums and government‑sponsored scheme channels.
- Banks are guided to avoid procedural barriers like mandatory “no‑due” certificates for government‑sponsored loans, use CIC‑based checks and affidavits, and ensure timely subsidy release to strengthen uptake among targeted beneficiaries.
- Priority sector directions provide the classification backbone for these programs, including co‑lending and on‑lending windows, while PSL FAQs clarify weaker‑section classification criteria to support accurate reporting and compliance.
Operational compliance points
- Tag all NRLM SHG accounts correctly in CBS and adhere to subvention claim formats and timelines with statutory auditor certification to ensure reimbursement under notified slabs.
- Update internal manuals to reflect NULM’s closure and RBI’s withdrawal of NULM circulars and returns, ceasing obsolete reporting while preserving records for audits and reconciliations.
- Activate calamity relief playbooks upon state declaration, covering restructuring eligibility, moratorium terms, fresh working capital, and area‑level review mechanisms per Master Directions.
- Implement SCs/STs and minority community cells, higher‑level rejection controls, streamlined applications, and SLBC/DLCC monitoring to meet inclusion goals and reporting requirements.
Governance and reporting
- Use SLBC and DLCC platforms to set targets, review progress, and coordinate with DICs and state agencies for SCs/STs, minorities, and livelihood missions, ensuring quarterly data consolidation and remedial action.
- Maintain PSL‑compliant classification and data integrity for weaker sections, including reliance on applicant declarations where permitted, and align on-lending/co‑lending exposures with current PSL Master Directions.
- Reference RBI’s Master Circular/Master Direction repositories for current versions and ensure timely transition when circulars are updated, superseded, or withdrawn.
Practical checkpoints for banks
- For NRLM: calibrate SHG CCLs, track five‑year tenors, and synchronize subvention claims with NABARD/program windows.
- For calamities: deploy restructuring templates, document declaration evidence, and coordinate damage assessment–linked relief with state authorities under the Master Directions.
- For inclusion: institute SCs/STs monitoring cells, designate minority officers, and enforce higher‑level scrutiny of rejections and barrier‑free procedures for sponsored schemes.
Key references
- NRLM updates and consolidation for SHG credit, interest subvention, and CBS tagging for claims reflect the current operational framework for rural livelihoods.
- NULM concluded on September 30, 2024; RBI withdrew related circulars and returns effective May 21, 2025, altering banks’ compliance posture for urban livelihood scheme reporting.
- Relief measures Master Directions (SCBs and RRBs) remain the authoritative standard for restructuring and fresh finance in declared calamity areas.
- The 2025 Master Circular on SCs/STs and the master circular on minority communities steer banks on inclusive credit, monitoring architecture, and PSL/weaker section alignment.
Conclusion:
Together, these regulatory guidelines create a cohesive architecture for banks to serve vulnerable sections of society while maintaining prudential standards. By consolidating instructions on NRLM, withdrawing NULM frameworks, standardizing calamity relief, and strengthening credit flows to SCs, STs, and minority communities, the RBI ensures that inclusive finance remains an operational priority rather than a peripheral activity. For banks, the task lies in effective implementation—updating systems, monitoring compliance, and integrating these measures into their financial inclusion strategies to support sustainable livelihoods and resilience against shocks.
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