Ref.No.RBI.DFIBT/11451-11899/DFIBT-23/2022-23

Circular No.09/ DFIBT-01/2023

31 Jan 2023

Chairman and Managing Director / Chairman / Chief Executive Officer

Scheduled (including Small Finance Banks and Payment Banks) (Commercial Banks)

Regional Rural Banks

State Cooperative Banks

Madam/ Dear Sir

Financial Inclusion Fund-Differentiated Approach - Revised Circular and updated list of Special Focus District (SFD)

1. Please refer to our Circular No. 105/DFIBT-04/2019 dated 23 April 2019 and Circular No.36/DFIBT-07/2021 dated 17 March 2021 regarding Special Focus Districts (SFDs) identified for Differentiated Approach for financial inclusion interventions to give more thrust on backward districts that are constrained by various physical, economic and sociological characteristics.

2. In this connection, we advise that the Government of India has revised the list of LWE-affected districts from the existing 90 districts to 70 districts and NITI Aayog has also modified the list of Aspirational Districts. Accordingly, the revised list of 356 Special Focus Districts is enclosed for your ready reference and necessary action.

2. This circular will come into effect from the date of issue of the circular. All the on-going projects, sanctioned prior to the date of this circular will continue to be governed by terms and conditions of sanction as per circular No. 105/DFIBT-04/2019 dated 23 April 2019 and Circular No. 36/DFIBT-07/2021 dated 17 March 2021

Sincerely

(Bhallamudi Sridhar)
Chief General Manager

attached - above

Note : This circular overrides previous circular nos. 105/DFIBT-04/2019 dated 23.04.2019 and 36/DFIBT-07/2021 dated 17.03.2021.

Circular No. NB.09/ DFIBT-01/ 2023

31 January 2023

The Chairman and Managing Director/ Chairman/ Chief Executive Officer
Scheduled Commercial Banks
(including Scheduled Small Finance Banks and Payment Banks)
Regional Rural Banks
State Cooperative Banks
District Central Cooperative Banks

Madam/ Dear Sir

Financial Inclusion Fund- A Differentiated Approach

In the past decade, Financial Inclusion Fund (FIF), has been utilised for putting in place the required financial inclusion infrastructure in banks, as well as for providing much needed financial literacy. During this period, the concerted efforts of all stakeholders have brought notable progress in both spheres i.e creating financial awareness and delivery of financial services. However, there still exist regions which are financially excluded and banks where technology adoption is inadequate, thus preventing equitable spread of financial services. To address these disparities in development of various areas and banks, a differentiated strategy for financial inclusion was introduced for support from the FIF from the financial year 2019-20.

2. Differentiated Strategy
The strategy involves more thrust on backward districts that are constrained by various physical, economic and sociological characteristics, now termed as the Special Focus Districts (SFDs). The SFDs comprise all Aspirational Districts, Left Wing Extremism (LWE) affected districts, districts of Hill States, A & N Islands as also those of the North Eastern Region. Further low Priority Sector Lending (PSL) credit flow districts (per capita credit flow < ?6000) indicated by RBI were also added in the SFDs. At present there are 356 SFDs in the country (Annexure I). The grant support from FIF for projects implemented in these SFDs is 90% of the eligible expenditure incurred by the implementing bank. The grant support for projects in other districts would be limited to 60%, 80% and 90% of eligible expenditure for Scheduled Commercial Banks (SCBs) including scheduled Small Finance Banks (SFBs) and Payment Banks (PBs), Regional Rural Banks (RRBs) and Rural Cooperative Banks (RCBs), respectively.

3. Schemes
The schemes under FIF have been categorized into three broad groups viz. (i) Standard Schemes on Tap (ii) Special Projects and (iii) Government Schemes.

3.1 Standard Schemes on Tap
There are nineteen schemes in this group, which will be available on tap. However, projects sanctioned under these schemes will have a specific implementation period from the respective date of sanction. These schemes cover activities such as financial literacy, banking technology adoption, regulatory and connectivity & power infrastructure. The details of these schemes are furnished in Annexure II (i.e. Standard Schemes on Tap)

3.2 Special Projects
Special Projects are ‘pilot projects’ which are sanctioned on a project basis and have project specific objectives and outcomes. The pilot projects sanctioned earlier such as Bank Sakhi, Training for BC, CFL etc. and some projects that have balance sanctioned commitments have been grouped under this category.

3.3 Government Schemes
Government Schemes, as and when required, will be implemented by NABARD, Head Office.
The schemes for of Aadhaar Enrolment and Update Centres (AECs) was available upto 30 September 2019 for assistance. 20 lakh BHIM Aadhaar Pay Devices
(Both schemes have been since discontinued)

4. Approach to FI
To achieve the goals of this differentiated strategy, banks need to adopt a scientific process for identification of area, do proper planning, submit proposal to NABARD, Regional Office for sanction and effectively implement schemes, monitor the outcomes and claim eligible expenditure from NABARD, Regional Office. All banks are requested to plan their requirements for financial literacy and inclusion infrastructure assistance from FIF, in both physical as well as financial terms and ensure that these are in sync with Financial Inclusion Plans of the bank, Gram Panchayat Development Plan, and the State’s preference for backward districts as well as blocks. To enable this, all banks including the Scheduled Commercial Banks will submit the proposals under FIF to the respective Regional Offices of NABARD (subject to certain exceptions), to enable better control on state-wise implementation of the schemes with better monitoring of desired outcomes.

5. Monitoring
The implementation of projects sanctioned under FIF will be monitored by NABARD, RO on a quarterly basis and feedback shared in SLBC fora, besides undertaking visits
and studies. Further, it is also decided that ex-post evaluation of all schemes where financial support of more than Rs.25 crore has been sanctioned and released will be conducted by NABARD through a third party.

6. Proposal
6.1 Project proposal and claim formats for submission have been simplified and are enclosed. (Annexures III- Proposal Format and Annexure IV- Claim Format).
6.2 This circular will come into effect from the date of issue and the revised norms for these schemes will be applicable replacing the earlier ones. All ongoing projects, sanctioned prior to the date of this circular will continue to be governed by terms and conditions as sanctioned. These will get closed on completion and clarification, if any in this regard may be sought from the concerned sanctioning office.

7. CGM(DFIBT),
HO is the final authority to interpret any clause of this circular and DMD, NABARD is the final authority for amending any clause of this circular.

8.
This Circular overrides the previous circular numbers 105/DFIBT-04/2019 dated 23 April 2019 and 36/DFIBT-07/2021 dated 17 March 2021)

Yours faithfully,

(Bhallamudi Sridhar)
Chief General Manager

Annexures:
I. List of SFDs
II. Standard Schemes on Tap
III. Proposal Format
IV. Claim Format
V. Previous Circular which stands overridden.