Credit to non-farm business to be under general credit card scheme

MUMBAI: To increase the flow of credit to individuals for entrepreneurial activity in non-farm sector, the Reserve Bank today said such credits should be extended through General Credit Cards scheme under the Financial Inclusion Plans (FIPs).

"...any other credit card (artisan credit card, laghu udyami card, swarojgar credit card, and weaver's card) in existence and catering to the non-farm entrepreneurial credit needs of individuals should be included for reporting of credit extended through the General Credit Cards ( GCC) under the Financial Inclusion Plans (FIPs)," RBI said in a release.

It was observed that data reported by banks under GCC is not showing entrepreneurial credit extended to individuals, RBI said.

Further, the RBI said that, "there will be no ceiling on the loan amount as long as the loan is for the purpose of non-farm entrepreneurial activity and is otherwise eligible for classification as priority sector."

The limits should be fixed on the basis of risk assessment on a case to case basis, it said.

The scheme should cover the entire country, the RBI said, adding, the security norms for such credits will be in accordance with RBI guidelines on collateral free lending for micro and small units.

The central bank further said that GCC is intended to cover all entrepreneurial credit and consumption credit extended to individuals should not be reported under GCC.

However, it said, the revised guidelines do not preclude the banks from issuing any other credit card to their customers for their consumption needs.

"These guidelines will supersede the GCC guidelines issued by RBI in December 2005 and May 2008. The revision has been done to ensure greater flow of entrepreneurial credit to individuals, particularly to borrowers of small means," RBI said.

RBI also asked the banks to implement the revised guidelines on GCC scheme with immediate effect.