1. [March 1972](RBI_Notification_20070613_Revision%20of%20Differential%20Rate%20of%20Interest%20Scheme.pdf#page=1&selection=9,1,13,71) -  Govt. of India announced a scheme, known as Differential Rate of Interest Scheme (DRI), for extending financial assistance, without any collateral, at concessional rate of interest at the rate of 4% to selected low income groups of the rural and urban population, for productive endeavours initially by public sector banks and then by private sector banks also. 2. June 1972 - the DRI scheme was introduced 3. July 6, 1977 - RBI issued guidelines for implementation of the scheme 4. As the credit is provided by banks, RBI's role is to monitor the flow of credit under these schemes. 5. Limit 1. [June 13, 2007](RBI_Notification_20070613_Revision%20of%20Differential%20Rate%20of%20Interest%20Scheme.pdf) - In his Budget Speech ( Para 87) for 2007-08, the Hon’ble Finance Minister has proposed to raise the limit of the loan under the Differential Rate of Interest scheme from ₹6500 to ₹15,000 and the limit of the housing loan from ₹5000 to ₹20,000 per beneficiary. 2. Members of SCs/STs satisfying the income criteria of the scheme can also avail of housing loan, which is over and above the limit of individual loan). 6. Eligibility 1. [April, 10, 2008](RBI_Notification_20080410_Differential%20Rate%20of%20Interest%20Scheme-%20Revision%20of%20the%20income%20limits.pdf) - borrowers with annual family income of Rs. 18,000 in rural areas and Rs. 24,000 in urban areas will now be eligible to avail of the facility as against the earlier annual income criteria of Rs. 6400 in rural areas and Rs. 7200 in urban areas, fixed by the Government of India in 1986. 2. The size of land holding should not exceed 1 acre of irrigated land and 2.5 acres of unirrigated land, but not applicable to SCs/STs. So SCs/STs can avail this scheme irrespective of their land holdings. 3. So DRI scheme exclusively caters to the credit requirements of the **weakest among the weak** and is a niche scheme for the benefit of poor sections of the rural and urban population. 7. Target for Banks 1. Before 2012, the target for lending under DRI scheme was fixed at 1% of the previous years’ total advances at the end of March of previous year. 1. August 2011 - RBI set up a Committee to re-examine the existing classification and suggest revised guidelines with regard to Priority Sector lending classification and related issues (Chairman: Shri M V Nair). 2. February 2012 - The Committee submitted its report in February 2012 3. [July 20, 2012](RBI_Notification_20120720_Priority%20Sector%20Lending%20–%20Targets%20and%20Classification.pdf) 1. The priority sector guidelines were revised, which superseded the guidelines mentioned in the master circular on priority sector lending dated [July 2, 2012](RBI_20120702_Master%20Circular%20-%20Lending%20To%20Priority%20Sector.pdf). 2. DRI scheme was included under the advances to weaker sections, and the target of 1 per cent of total advances outstanding as at the end of the previous year was accordingly repealed. 2. It is also not sponsored by the govt and hence banks absorb the entire cost. 3. In order to ensure that persons belonging to SCs/STs also derive adequate benefit under the DRI Scheme, banks have been advised to grant eligible borrowers belonging to SCs/STs such advances to the extent of not less than 2/5th (40 percent) of total DRI advances. At least two third of DRI advances should be granted through rural and semi-urban branches. 8. But the interest from borrowers has been low due to lower size of loan amounts compared to other capital subsidy schemes. 9. The scheme has been reviewed periodically and modifications have been made therein ## Present 1. Target for Banks 1. Under priority sector-lending (PSL), guided by the instructions in [Master Directions - Reserve Bank of India (Priority Sector Lending – Targets and Classification) Directions, 2025](https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=12799) dated March 24, 2025, ==lending to beneficiaries of this scheme is part of "Advances to weaker sections of the society", and the target is 12 percent of ANBC or CEOBSE (from 2023-24, as it was less before this), whichever is higher, for Domestic Commercial Banks (excl. RRBs & SFBs) & Foreign Banks with 20 branches and above.== 2. "Weaker Sections" have been defined in the Master Direction 3. Foreign Banks with less than 20 branches have no targets under this scheme. 2. Limit and eligibility is same as above 3. DRI Scheme is also covered under the ==Master Circular - Credit facilities to Scheduled Castes (SCs) & Scheduled Tribes (STs)== >[Differential Rate of Interest scheme](RBI_History%20of%20The%20Reserve%20Bank%20of%20India%20(1981-97)_Volume%20IV.pdf) in History of The Reserve Bank of India (1981-97)-Volume IV ## Master Circular/ Master Directions 1. [June 16, 2025](https://rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=12869) - ==Master Circular - Credit facilities to Scheduled Castes (SCs) & Scheduled Tribes (STs)== 2. [Master Directions - Reserve Bank of India (Priority Sector Lending – Targets and Classification) Directions, 2025](https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=12799) dated [March 24, 2025](RBI_Press%20Release_20250324_RBI%20Releases%20Revised%20Priority%20Sector%20Lending%20Guidelines.pdf) 1. Supersession 1. [September 04, 2020](RBI_Master%20Directions_20200904_Master%20Directions%20–%20Priority%20Sector%20Lending%20(PSL)%20–%20Targets%20and%20Classification.pdf) - Reserve Bank of India (Priority Sector Lending – Targets and Classification) Directions, 2020 2. [July 7, 2016](RBI_Master%20Direction_20160707_Master%20Direction%20-%20Priority%20Sector%20Lending%20–%20Targets%20and%20Classification.pdf) - Master Direction - Regional Rural Banks - Priority Sector Lending – Targets and Classification (last updated on December 05, 2019) *(withdrawn)* 3. [April 23, 2015](RBI_Guidelines-20150423_Priority%20Sector%20Lending-Targets%20and%20Classification.pdf) - Revised guidelines - Priority Sector Lending-Targets And Classification *(withdrawn)* 4. [July 1, 2014](RBI_Master%20Circular_20140701_Master%20Circular%20-%20Priority%20Sector%20Lending-Targets%20and%20Classification.pdf) - Master Circular - Priority Sector Lending-Targets and Classification (up to June 30, 2014) *(withdrawn)* 5. [July 20, 2012](RBI_Notification_20120720_Priority%20Sector%20Lending%20–%20Targets%20and%20Classification.pdf) - Revised guidelines - Priority Sector Lending – Targets and Classification *(withdrawn)* 6. [July 2, 2012](RBI_20120702_Master%20Circular%20-%20Lending%20To%20Priority%20Sector.pdf) - Master Circular *(withdrawn)* 3. [FAQs](https://rbi.org.in/scripts/FAQView.aspx?Id=87) on Priority Sector Lending (PSL) ## Related Notes 1. [Priority Sector Lending (PSL)](Priority%20Sector%20Lending%20(PSL).md) 2. [General Credit Card (GCC) Facility](General%20Credit%20Card%20(GCC)%20Facility.md) 3. [Differential Rate of Interest (DRI) scheme](Differential%20Rate%20of%20Interest%20(DRI)%20scheme.md) 4. [NBFC-MFI](NBFCs.md#NBFC-MFI) ## References 1. Master Circular - Credit facilities to Scheduled Castes (SCs) & Scheduled Tribes (STs). [Link](https://rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=12869#:~:text=4.2%20Differential%20Rate%20of%20Interest%20(DRI)%20Scheme)