RBI issues Master Circular – Deendayal Antyodaya Yojana – NRLM

Ashish M. Shaji

30 Sep, 2020

The Reserve Bank of India recently modified the Deendayal Antyodaya Yojana – National Rural Livelihoods Mission by issuing a master circular on 18^th September, 2020. In this article we shall take a look at some of the essential inclusions in the master circular but before that let’s have a brief understanding of this Yojana.  

What is Deendayal Antyodaya Yojana – National Rural Livelihoods Mission?

The Ministry of Rural Development, Government of India had launched the National Rural Livelihoods Mission by restructuring the Swarnajayanti Gram Swarojgar Yojana with effect from 1^st April 2013 through the RBI circular. This mission was renamed to DAY-NRLM (Deendayal Antyodaya Yojana – National Rural Livelihoods Mission) with effect from 29^th March 2016.

It is a flagship initiative program of the government of India for promoting poverty reduction by building strong institutions of the poor and especially women and enabling these institutions to access a host of financial services and livelihoods.

It adopts a demand driven approach allowing states to formulate their state-specific poverty reduction action plans.

Deendayal Antyodaya Yojana – National Rural Livelihoods Mission- Guiding principles and core values

The guiding principles of Deendayal Antyodaya Yojana – National Rural Livelihoods Mission are as follows:

• Poor may have a strong desire to come out of poverty and they have innate capabilities;
• Social mobilization and building strong institutions of the poor is necessary for unlocking the capabilities of the poor;
• External dedicated and sensitive support structure is needed to induce the social mobilization, institution building and process of empowerment; and
• Facilitating knowledge dissemination, skill building, credit access, marketing access and access to other livelihood services underlines this.

The core values that guide all the activities under National Rural Livelihoods Mission are:

• Inclusion of the poorest;
• Transparency and accountability of processes and institutions;
• Ownership and essential role of poor and their institutions; and
•  Community self reliance and self dependence.

What are the key features of this Yojana (DAY-NRLM)?

The key features of the Deendayal Antyodaya Yojana – National Rural Livelihoods Mission, as mentioned in RBI master circular, are as follows:

• Universal Social Mobilization

DAY-NRLM will ensure that minimum one member from each identified rural poor household, (preferably a women), would be brought under the network of Self Help Group in a time bound manner. Both men and women will be organized to address the livelihood issues that are farmers organizations, milk producers’ cooperatives etc. These institutions are inclusive and no poor will be left out.

• Participatory Identification of Poor

DAY-NRLM will also undertake community based process that is participation of poor in the process of identifying the target group. In recent years, the participatory identification of poor method has been developed and it has been applied successfully in states such as Andhra Pradesh, Kerala, Odisha and Tamil Nadu. 

• Promotion of institutions of poor

Strong institutions of the poor like Self Help Groups and their village level and higher level federations are essential to provide space, voice and resources for poor and to reduce their dependency on external agencies. Moreover, Deendayal Antyodaya Yojana – National Rural Livelihoods Mission will promote specialized institutions such as livelihoods collectives, producers’ cooperative/companies for livelihoods promotion through deriving economies of scale, backward and forward linkage and access to information etc.

• Strengthening existing Self Help Groups and federations of poor

This Yojana would strengthen all existing institutions of the poor in a partnership mode. The self help promoting institutions would promote social accountability practices with a view to introduce great transparency.

• Emphasis on training, capacity building and skill building

The yojana would ensure that poor people are provided requisite skills for managing their institutions, linking up with markets, enhancing their credit absorption capacity and creditworthiness etc.

• Revolving fund and community investment support fund

A revolving fund would be provided to eligible Self Help Groups as an incentive to inculcate the habit of thrift and accumulate their funds for meeting their credit needs.

The community investment support fund will be a corpus and will be used for meeting credit needs of members and as catalytic capital for leveraging repeat bank finance.

• Universal Financial inclusion

The Yojana would work to achieve universal financial inclusion beyond basic banking services to all poor households, Self Help Groups and their federations.

• Interest Subvention

In order to ensure affordable credit, this DAY-NRLM has a provision for subvention on interest rate over 7% per annum for all eligible Self Help Groups.

• Funding Pattern

It is a centrally sponsored scheme and the financing will be shared among Centre and state in 60:40 ratios.

• Phased Implementation

A phased implementation approach is adopted in this and it would reach all districts by the end of 12^th Five year plan.

• Intensive blocks

The blocks that are taken for the implementation of this yojana, intensive blocks, will have access to a full complement of trained professional staff.

• Rural Self Employment Training Institutes

RSETI is built on the model pioneered by Rural Development Self Employments Institute. The model intends to transform unemployed youth to confident self employed entrepreneurs by a short duration experiential learning programme.

Financial assistance to Self Help Groups

• Revolving Fund

Deendayal Antyodaya Yojana – National Rural Livelihoods Mission^[1] will provide revolving fund support to the Self Help Groups in existence for a minimum of 3/6 months and follow the norms of good Self Help Groups. The Self Help Groups that haven’t received any revolving fund earlier shall be provided with it as corpus with minimum 10000 rupees and maximum of 15000 rupees per Self Help Group.

• Discontinuation of Capital Subsidy

No capital subsidy will be sanctioned to any Self Help Group from the date of implementation of DAY-NRLM.

• Community Investment Support Fund

Community Investment Support Fund will be provided by Ministry of Rural Development to the Self Help Groups promoted under Day-NRLM in all blocks and will be routed through Village level/Cluster level federations, to be maintained by the federations. It would be used to advance loans to the Self Help Groups by the federations and or to undertake the common/collective socio-economic activities.

• Introduction of Interest Subvention

Deendayal Antyodaya Yojana – National Rural Livelihoods Mission includes the provision for interest subvention to cover the difference between the lending rate of banks and 7%, on all credit from banks or financial institutions availed by women Self Help Groups for maximum 300000 rupees per Self Help Group.

 It will be available across the country in two ways:

1. In the 250 identified districts, banks can lend to the women Self Help Groups @ 7% up to an aggregated loan amount of 300000 rupees. The banks will be subvented to the extent of difference between Weighted Average Interest Charged and 7%, subject to maximum limit of 5.5%. Additional 3% interest subvention is also available on prompt repayment by the Self Help Groups, reducing the effective rate of interest to 4%.
2. In the remaining districts, banks can lend at their respective lending rates that is applicable to Self Help Groups.

Eligibility criteria for the Self Help Groups to avail loans

• Self Help Groups should be in active existence at least for last six months according to the books of account of Self Help Groups.
• It should be practising “Panchasutras” which means regular meetings, regular savings, regular inter loaning, timely repayment and up to date books of accounts.
•  It should be qualified according to the grading norms set by NABARD (National Bank for Agriculture and Rural Development).
• The existing defunct Self Help Groups are eligible for credit if they are revived and continue to be active for minimum 3 months period.

Conclusion