RBI asks banks to ease norms for individual borrowers
29 01 2015
In order to ensure hassle free credit to small borrowers, RBI has directed banks to do away with the practice of obtaining ‘No Due Certificate’ from individual loan takers. In a notification issued from Mumbai, RBI said that lenders must dispense with obtaining ‘No Due Certificate’ in view of the technological developments and the different ways available with banks to avoid multiple financing. RBI said it received complaints from borrowers as banks were refusing to grant loans without ‘No Due Certificate’, especially in rural and semi-urban areas.
RBI has clarified that this dispensation will be valid for Self Help Groups as well as Joint Liability Groups in rural and semi-urban areas for all types of loans. The notification adds that it will also cover loans under government sponsored schemes, irrespective of amount involved. This announcement follows RBI’s earlier directive on relaxing service area norms and simple procedures for farm loans of up to Rs 50,000 to small and marginal farmers. For sanctioning such loans, bank can use alternative ways like loan history from credit information companies, self-declaration from borrower, peer monitoring, etc other than the No Due Certificate.