Rohtas – On paper, numerous government schemes claim to provide employment opportunities to marginalized and underprivileged communities. But in reality, do Dalit and backward-class youth truly benefit from them? The answer, unfortunately, seems to be no. One such scheme is the "Suvidha" Loan Facility under the National Scheduled Castes Finance and Development Corporation (NSFDC), designed to economically empower Scheduled Caste individuals by offering financial assistance for self-employment ventures.

Two aspiring entrepreneurs from Bihar have been struggling for the past three months to secure a loan under this scheme from the Bank of Baroda (BoB). Despite meeting all eligibility criteria and submitting the required documents, their applications were arbitrarily rejected, raising serious questions about systemic discrimination and bureaucratic apathy.

Pappu Kumar, a resident of Mauna village in Bihar, has filed a formal objection with the Reserve Bank of India (RBI) against the Bank of Baroda (BOB), alleging non-compliance of the guidelines of the National Scheduled Caste Finance and Development Corporation (NSFDC) and discriminatory behavior. Pappu Kumar, an unemployed Scheduled Caste youth with an annual family income of Rs 1.25 lakh, had applied for a commercial vehicle loan under the NSFDC Suvidha Yojana on March 28, 2025.

Pappu said that the bank's Dehri on Son branch has discriminated and harassed him, deliberately delayed the loan and arbitrarily rejected the application, which has weakened the objective of this scheme to promote financial inclusion and self-employment for marginalized communities. Vikas Kumar also has a similar complaint.

NSFDC, a central public sector enterprise under the Ministry of Social Justice and Empowerment, under whose facility scheme Scheduled Caste persons with annual family income up to Rs 3 lakh can apply for a loan. The applicant is provided a loan of up to Rs 10 lakh for small business activities, commercial vehicles such as jeeps and car taxis, without any collateral/security requirement or assessment of repayment capacity based on the current income of the applicant.

Pappu and Vikas Kumar had applied under this scheme. Pappu told The Mooknayak that he had applied for a loan on 28-03-2025 to purchase Tata Tigor XT CNG model for self-employment/business. Under the scheme, loan is provided at subsidized rate for purchasing the vehicle, through which he wanted to promote self-employment.

Pappu says the BOB branch manager initially insisted on submitting income tax returns, even though it is not required under NSFDC guidelines. His application was accepted only after repeated clarifications.

Despite two months of submitting the application, the bank kept the loan pending "in process" without any valid justification and kept citing vague reasons like approval from higher authorities etc. When Pappu filed an RTI application to clarify the reasons for the delay, he received an incomplete and misleading response, which further strengthened his allegations of caste-based discrimination and misuse of position.

Pappu argues that the bank's actions violate the mission of NSFDC to promote the purpose, prosperity among the Scheduled Castes through financial assistance and skill development initiatives.

Similarly, the bank expressed its inability to give a loan to Vikas Kumar, writing that Vikas's annual income is Rs. 1 lakh 25 thousand and he has applied for a loan of Rs. 8,90,689/- for a commercial vehicle. As per the bank's guidelines, loans can be given only up to three times the income. In such a situation, the bank said that Vikas should be given a loan of Rs. 3 times his annual income. The loan amount can be provided only upto Rs. 3,75,000/-. If the loan is given for seven years (84 months), then the average EMI will be Rs. 12000 to 15000 whereas Vikas's average monthly income is Rs. 10416/-.

The bank wrote in its letter, since Vikas did not have the repaying capacity, hence they were unable to approve his loan application as per the above documents and bank guidelines." The applicant says that the bank misrepresented his loan application by processing it under agricultural finance terms, which is inconsistent with the objectives of the NSFDC scheme.

The NSFDC framework evaluates repayment capacity not on the basis of the applicant's current income but on the basis of expected income from the proposed venture such as commercial vehicle operation. Kumar estimates that a self-employed taxi driver can generate an income of Rs 25,000 to Rs 30,000 per month, which can easily cover the EMI of Rs 15,000-16,000, yet BOB neither approved the loan nor considered the possibility of this income, but instead applied business loan norms that are inappropriate for this scheme.

Pappu Kumar has made several serious allegations against the Bank of Baroda (BOB). He says that the bank changed the terms of his loan, violating the rules of NSFDC (National Stadium Finance Development Corporation). According to NSFDC, the loan repayment period should have been 66 months, but the bank increased it to 84 months. Also, the bank offered him a loan at the normal business rate instead of a subsidized low interest rate (4-6%), which increased the financial burden on him.

In a broader critique, Kumar questions BoB’s selective risk assessment practices, noting that while his modest loan application faces stringent scrutiny, the bank has written off ₹44,481.24 crore in bad debts for 144 corporate accounts over eight years, many involving privileged borrowers. He argues that this disparity reveals a discriminatory bias, with unemployed Scheduled Caste youth facing stricter standards than high-risk corporate entities, violating principles of equity and RBI’s fair lending guidelines. Kumar also cites BoB’s failure to adhere to Priority Sector Lending norms, which mandate concessional credit for marginalized communities.

Seeking relief, Kumar has urged the RBI to direct BoB to process his ₹8.91 lakh loan application under NSFDC terms, sanction it with applicable subsidies, and compensate him ₹8.91 lakh for financial and reputational losses and ₹1 lakh for mental distress caused by the bank’s conduct. He also calls for action against BoB for non-compliance and discriminatory practices and for the establishment of a clear framework to ensure proper implementation of the NSFDC scheme.