Commercial banks in India pay special attention to the various novel and innovative credit schemes and facilities in their operations for the benefit of the society at large. The major ones may be reviewed as follows:
Differential Rates of Interest Scheme (DRI) Scheme of Credit
The public sector banks have introduced the Differential Rates of Interest (DRI) Scheme in 1972 to extend bank credit to the weaker sections at concessional rates of interest.
Under the DRI scheme, the banks are directed by the Reserve Bank to finance:
1. Scheduled castes and scheduled tribes and others engaged on a modest scale in agriculture and allied activities.
2. The physically-handicapped people on a modest scale by offering loans for cottage and rural industries and vocations like sewing garments, making reasonably cheap edibles, running wayside tea stalls, basket-making etc.
3. People engaged in elementary processing of forest products.
4. Village artisans in the decentralised sector.
The private sector banks also participate in the DRI scheme on a voluntary basis.
The scheme was further broad-based in 1977. It has been stipulated that the public sector banks have to deploy 1 per cent of their total advances to the weaker sections of society at a low interest rate of 4 per cent.
The scheme envisages promoting gainful employment among the weaker sections.
As per the revised guidelines issued by the Reserve Bank, commercial banks are obliged to set aside 40 per cent of their advances meant under DRI scheme for beneficiaries belonging to the scheduled castes and scheduled tribes.
The public sector banks have made commendable progress in implementing the DRI scheme during 1972-1986. Table 16 depicts the progress trend.
The DRI lending of the public sector banks increased from 0.87 crore covering 2,600 accounts in end-December 1972 to Rs. 708 crores covering 4,287 lakhs accounts in end-June 1990.
Since 1980, the public sector banks have attained and exceeded the stipulated target of at least 1 per cent of total advances.
They have also surpassed the stipulated target of 40 per cent share of advances to SC/ST borrowers in the total DRI advances, by exceeding it by 50 per cent in end-December 1986. Under the scheme, the public sector banks extended Rs. 702 crores as advances in 1995.
Task Force on DRI Scheme:
In April 1983, the government set up a task force on the DRI scheme to examine the various provisions of the scheme and to suggest modifications. The Union Finance Ministry considered its report and the following decisions were made.
1. The present form of the scheme will continue to operate by charging interest at the rate of 4 per cent per annum to the beneficiaries.
2. The beneficiaries of the DRI scheme should be selected on the basis of eligibility criteria prescribed by the government. They should not be recipients of benefits under any of the subsidy-linked schemes of Central/State governments or state-owned corporations.
3. The ceiling of annual family income of borrowers for eligibility for assistance, under the DRI Scheme, is raised from Rs. 2,000 to Rs. 6.400 in rural areas and from Rs. 3,000 to Rs. 7,200 in urban areas.