Reference No. NB.HO DFIT /13076-13084/DFIBT-23/2022-23
27 February 2023
Circular No.32/DFIBT - 02/2023

The Chairman/ MD & CEO

State Bank of India, Punjab National Bank, UCO Bank, Bank of Baroda, Indian Bank, Central Bank of India, Union Bank of India, Bank of India, Jammu & Kashmir Bank Ltd

Madam/Sir,

Centers for Financial Literacy (CFL) Project – Scaling Up

Please refer to NABARD Circular No 27/DFIBT-06/2021 dated 25 February 2021 wherein additional instructions issued as Addendum to Standing Operating Procedure was shared with the Banks.

In continuation of above, we advise that The Advisory Board for Financial Inclusion Fund (FIF) has approved the Centre for Financial Literacy (CFL) Project – “Scaling Up”- Phase II to set up 448 new CFLs and additional OPEX for CFLs set up in difficult geographies with a project cost of ₹15313.40 lakh. The 66 CFLs already sanctioned under Phase I of Scaled up CFL Project for Uttar Pradesh will now be implemented in Phase II of Scaled Up CFL Project with a project cost of ₹1933.80 lakh.

2. The Compendium of Instructions for Stakeholders as on October 2022 formulated by RBI for facilitating the operationalization of the CFLs is enclosed.

3. Your Bank has been identified to implement the Centres for Financial Literacy (CFL) Project – “Scaling Up” Phase II by December 2022 being anchored and monitored by the Reserve Bank of India.

3.1 RBI has identified CFLs established in the following States to be classified under difficult geographies viz. Arunachal Pradesh, Assam, Himachal Pradesh, Jammu & Kashmir, Ladakh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Uttarakhand.

3.2 The CFLs established in States other than those indicated in point 3.1 above will be classified under Normal Terrain.

4. Funding of the CFL Project from FIF:

i. For Normal Terrain:

The funding pattern for CFLs to be set up in Phase II of the “Scaled Up” CFL Project in Normal Terrain is indicated in below table. CFLs established in Phase I of the “Scaled Up” CFL Project in Normal Terrain will continue to get remaining sanctioned grant assistance as per table below:

ii. For Difficult Geographies:

As a special dispensation, OPEX limits for CFLs established in difficult geographies has been increased by Rs.30,000/- per month per CFL effective from the month of December 2022. (Please Note that 90% of Rs.30,000/-, i.e., Rs.27,000/- per month per CFL may be borne by FIF and remaining 10 % of Rs.30,000/-, i.e., Rs.3,000/- per month per CFL may be borne by the Sponsor Banks).

iii. For CFLs already set up in Tripura in Phase I of CFL Project:

Additional OPEX for 10 CFLs set up in Tripura in Phase I of CFL Project under FIF are also eligible for increased OPEX for difficult regions effective from the month of December 2022 as per above para 4(ii).

iv. Unutilized amount of OPEX in FY 2021-22 to FY 2022-23:

Considering the difficulties arising due to unforeseen events like the COVID-19 pandemic, it has been decided that as a one-time measure, CFLs are permitted to carry forward the unutilized amount of OPEX in FY 2021-22 to FY 2022-23. Accordingly, NGOs are eligible to claim the unutilized amount, if any in FY 2021-22 from banks, during the FY 2022-23.

5. The Sample list of items that can be considered for reimbursement under CAPEX and OPEX are as under:

6. Modalities for operationalization of the scheme

i. Identification & Training of Resource Person

In general, LDM shall be the Nodal Officer for project implementation in a district.

Banks shall clearly communicate the details of the nodal officer/s responsible for handling the operational and financial aspects of the CFL project to FIDD CO, Regional Offices of RBI and NGOs.

ii. Support from FIF- Financial Claims & Reimbursement

• On entering into agreement with NGOs for the project, banks will submit a proposal (as per Annexure - I) to NABARD for sanction of grant assistance under FIF.
• NABARD will reimburse capital expenditure (maximum in two instalment) for the project from FIF. The operational expenses would be provided for a period of three years from FIF.
• Reimbursement under FIF for CAPEX will be up to maximum in two instalment and for OPEX on quarterly basis, based on claims submitted by banks (as per Annexure - II) to NABARD. The Bills, receipt, etc. may be preserved for a period of three years from the date of completion of the project by the sponsor bank for any future requirement.
• Sponsor banks will release monthly OPEX advance to NGOs on a rolling basis. NGOs are advised to submit their monthly bills to banks on the first working day of the following month. The bank shall share a detailed check list with the NGOs upfront. The banks will seek reimbursement form FIF, NABARD on quarterly basis. Further, banks shall release the next instalment of OPEX advance to NGOs only after receipt of the actual bills of the previous month from the NGOs.
• Banks will strictly ensure that under no circumstances, the overall limit per CFL will be breached as indicated at para 4.

iii. Other operational modalities

• Support under FIF for CFLs shall be made available on a reimbursement basis and no advance shall be granted for the purpose.
• In the event of a bank identified for setting up of CFLs in more than one State, the bank may split the proposal state-wise and submit the same to the respective Regional Office of NABARD.
• Support under FIF for any intervention has to be pre-sanctioned by NABARD and therefore the expenditure incurred after the date of sanction shall only be entertained. However, In view of the timeline for operationalizing the CFLs set up in Phase II of the scaled up CFL Project from December 2022, the expenditure incurred by the NGO(s)/Sponsor Bank(s) in connection with setting up of CFL(s) from the date of signing MoU between the NGO and Sponsor Bank during current financial year may be considered for reimbursement under FIF subject to discretion of the concerned Regional Office of NABARD.

iv. Timelines for Submission of Bills

• In the pilot project it has been observed that there has been substantial delay in reimbursement of OPEX and CAPEX by banks to NGOs. To obviate any such delay in the Scaled up CFL project, the process of reimbursement may be streamlined as under:

• NGOs are advised to submit their monthly bills to banks on the first working day of the following month.
• NGOs may submit their bills directly to the branch / LDM office / Controlling Office from which reimbursement will be made.
• Sponsor banks will release monthly OPEX advance to NGOs on a rolling basis. However, banks shall release the next instalment of OPEX advance to NGOs only after receipt of the actual bills of the previous month. An indicative checklist has already been forwarded by RBI to banks for OPEX reimbursement.
• Banks will be required to submit the claim to Regional Office of NABARD, seeking the reimbursement of the CAPEX (maximum in two instalment) & OPEX on quarterly basis within 15 days from the end of the quarter. Sponsor Banks should ensure to the extent possible that there is a uniform process in place for bill settlement and documentation across its offices.

v. The remuneration of the officials appointed by NGOs for monitoring/oversight/execution of the CFLs may be provided under the overall funding of the scaled up CFL project with the same being distributed across the CFLs under them. It should however be ensured that details of these officials and the list of CFLs under their oversight is part of the Action Plan submitted by the NGO. However, these expenses should be optimally made keeping in the view overall objective of the CFL.

vi. Monitoring Mechanism

• With a view to closely monitor the working of the CFLs, RBI Regional Offices shall be holding a Quarterly Meeting during the quarter itself, with all the concerned stakeholders viz. District and Block level CFL facilitators, Sponsor bank officials and Lead District Manager. The indicative issues to be discussed during the meeting are listed below:

• CFL Staffing issues
• Mapping of financial inclusion landscape, relevant stakeholders, institutions/agencies
• Training of CFL staff
• Conduct of FL activities as per the original Action Plan submitted by NGOs
• Data entry in the CFL Portal
• Funding issues, if any
• Progress in achieving the end outcomes.
• Any other operational issues

• For better co-ordination at the block level, concerned LDMs/ resource persons of the banks shall be advised by Regional Offices of RBI to periodically invite the CFL facilitators working in the block to the Block Level Bankers’ Committee (BLBC) meetings to increase their interface with the bank branches operating in the block.
• DDMs of NABARD will be involved closely with the functioning of the CFL Project in the district.

vii. MIS & Reporting Mechanism

The details of the training programme need to be entered in the CFL module of ADEPT portal of RBI on a continuous basis. Past data of the training programme are also to be entered in the portal.

7. This circular supersedes the following circulars on CFL Project:

• Circular No.27/DFIBT-06/2021 dated 25 February 2021
• Circular No.18/DFIBT-05/2021 dated 22 January 2021

Yours faithfully

(Bhallamudi Sridhar)
Chief General Manager

Attachment: as above