Banks can lend below base rate to tribals, differently-abled: RBI

The Reserve Bank today said banks can lend below the base rate, or the minimum lending rate, to tribals and physically challenged persons.

“Such lending (to tribals and handicapped), even if below base rate, would not be considered as a violation of our base rate guidelines,” the central bank said in a circular.

At present, banks get refinanced from National Scheduled Tribes Finance and Development Corporation (NSTFDC) and National Handicapped Finance and Development Corporation (NHFDC) for loans extended to tribals and differently-abled people.

Such lending would not be in contravention to the apex bank’s rule, which restricts lending below base rate to borrowers, the RBI added. Banks may charge interest at the rates prescribed under the schemes of NSTFDC and NHFDC to the extent refinance is available.

As per micro credit scheme of NSTFDC, banks can provide subsidised loans at interest rates not exceeding 8 per cent, where refinance at 3-5 per cent from the corporation is available.

Similarly, under various schemes of NHFDC, loans are provided at a concessional rates to beneficiaries, subject to  refinance option from the development corporation.

At present, base rates of banks are hovering around 10 per cent and the lenders are not allowed to lend below this rate.