December 27, 2005
To
All Scheduled Commercial Banks/ Regional Rural Banks
Dear Sir/Madam,
Scheme to cover loans for general purposes under
General Credit Card (GCC)
As you are aware, credit cards are now being
extensively issued to and used by individuals to make purchases of goods and
services on credit and make cash withdrawals. In rural areas, with limited Point-of-Sale
(POS) and limited ATM facilities, while similar product may not be feasible,
there has been demand for General Credit Card (GCC) akin to Kisan Credit Card
(KCC). The matter has been examined and it has been decided that banks introduce
a General Credit Card (GCC) Scheme for issuing GCC to their constituents in
rural and semi-urban areas, based on the assessment of income and cash
flow of the household similar to that prevailing under normal credit card. Under
the scheme, there would not be any insistence on security and the purpose or
end-use of the credit. Interest rate on the facility may be charged, as considered
appropriate and reasonable. The limit may be periodically reviewed and revised/cancelled
depending on track record of the account holder. With a view to targeting women
as beneficiaries of bank credit, they may be given a preferential treatment
under the GCC Scheme. Banks may utilize the services of local post offices,
schools, primary health centers, local government functionaries, farmers' association/club,
well-established community-based agencies and civil society organisations for
sourcing of borrowers for issuing GCC.
3. Guidelines for the GCC scheme, which include
entitlement to draw cash, are annexed.
4. Please acknowledge receipt to our concerned
Regional Office.
Yours faithfully,
(G. Srinivasan)
Chief General Manager
Annex
General Credit Card (GCC) Scheme
1. The Scheme
The Scheme shall cover general credit needs
of bank constituents in rural and semi-urban areas and shall be referred to
as the 'General Credit Card (GCC) Scheme'.
2. Objectives
The objective of the scheme is to provide hassle-free credit
to banks’ customers based on the assessment of cash flow without insistence
on security, purpose or end-use of the credit. This is in the nature of overdraft
or cash-credit with no end-use stipulations.
3. Participating banks
The Scheme may be implemented by all Scheduled
Commercial Banks and RRBs at any of their branches.
4. Nature of financial accommodation:
Cash withdrawal
The credit facility extended under the Scheme
will be in the nature of revolving credit. The GCC-holder will be entitled to
draw cash from the specified branch of bank up to the limit sanctioned and in
fact, this may be the only feasible mechanism in many cases.
5. Quantum of limit
Banks would have flexibility in fixing the limit
based on the assessment of income and cash flow of the entire household. However,
the total credit facility under GCC for an individual should not exceed Rs.25,000/-
6. Interest rate
Interest rate on the facility may be charged,
as considered appropriate and reasonable.
7. Flexibility in use of credit
The borrowers would be eligible for availment
of the credit facilities provided under GCC, as per their requirement, without
any insistence on security and the purpose or end-use of the credit.
8. Priority sector lending status
Fifty per cent of credit outstanding under GCC
up to Rs.25,000/- will be eligible for being treated as indirect agricultural
financing. The eligibility criteria will be subject to review.
9. Form of GCC
It is not necessary that GCC should be linked
to purchase and GCC may not necessarily be in the form of a card. GCC can be
issued in the form of a Pass Book, if the holder of GCC desires to operate cash
withdrawals from bank-branch.
10. Flexibility
Banks may consider appropriate modification
provided the essential features of the scheme are maintained and prior approval
of the Reserve Bank obtained.