No collateral for loans to SC/ST: FM

New Delhi: The government today said the provision of collateral security for getting loans from banks has been waived for Scheduled Castes and Scheduled Tribes (SC/ST) as part of measures to grant them easier access to credit.

"There is no need for collateral security for these sections for getting bank loans," Finance Minister Pranab Mukherjee told the Lok Sabha while replying to supplementaries during the Question Hour.

He said banks should not insist on deposits while considering loan applications under government sponsored poverty alleviation schemes/self-employment programmes from borrowers of these (SC/ST) communities.

In case of rejection of loan applications of SC/ST, it should be done at the next higher level instead of at the branch level indicating proper reasons for rejection, he said.

Mukherjee said banks have been asked to create greater awareness among SC/STs in order to encourage them to access credit facilities.

"Field staff should contact such borrowers to explain schemes and their advantages," he said.

Source: Financial Express