FLOW OF LOANS TO SCHEDULE TRIBES AND DEVELOPMENT OF

ENTREPRENEURSHIP IN SCHEDULE TRIBES

Tribals In Jharkhand
The tribes of Jharkhand consist of 32 tribes inhabiting the Jharkhand state in India. The

tribes in Jharkhand were originally classified on the basis of their cultural types:

 Hunter - Gatherer type - Birhor, Korwa, Hill Kharia

 Shifting Agriculture - Sauria Paharia

 Simple Artisans - Mahli, Lohra, Karmali, Chik Baraik

 Settled Agriculturists - Santhal, Munda, Oraon, Ho, Bhumij, etc.

The Scheduled Tribe (ST) population of Jharkhand State is as per 2001 census

7,087,068 constituting 26.3 per cent of the total population (26,945,829) of the State.

The Scheduled Tribes are primarily rural as 91.7per cent of them reside in villages.

District wise distribution of ST population shows that Gumla district has the highest

proportion of STs (68.4per cent). The STs constitute more than half of the total

population in Lohardaga and Pashchimi Singhbhum districts whereas Ranchi and

Pakaur districts have 41.8 – 44.6 per cent tribal population. Kodarma district (0.8

percent) preceded by Chatra (3.8 per cent) has the lowest proportion of the STs

Population. Jharkhand has 32 tribal groups:

o Munda o Gond o Bedia o Kharwar

o Santhal o Kol o Binjhia o Khond

o Oraon o Kanwar o Birhor o Kisan

o Kharia o Savar o Birjiali o Kora

o Parhaiya o Asur o Chero o Korwa

o Sauria-Paharia o Baiga o Chick-Baraik o Lohra

o Bhumij o Banjara o Gorait o Mahli

 FLOW OF LOANS TO SCHEDULE TRIBES AND DEVELOPMENT OF
ENTREPRENEURSHIP IN SCHEDULE TRIBES
o Karmali o Bathudi o Ho o Mal-Paharia

Most of the Schedule Tribe population is dependent on agriculture or wages or jobs or

petty works. Being a state of Schedule Tribes, the state of Jharkhand is not being run by

the Schedule Tribe in a commanding manner in the field of Business, Services,

Industries and Commerce. The development of Schedule Tribe Youth as an

entrepreneur is still a distant dream in Jharkhand. The Schedule Tribe youth either look

for government jobs which are limited in number or lands up with petty works. This is

hampering the overall development of the state and Schedule Tribes. Unless the

Schedule Tribe youth comes in the field of business and industry, the prosperity cannot

be achieved.

For running any business or industry, the capital is the main requirement. Other than

own contribution every entrepreneur needs financial assistance from Banks and

Financial Institutions. The Banks and FIs provides the Loans on the basis of appraisal of

project and by way of guarantee in the form of Mortgage of Property. This is a major

hindrance to the growth of entrepreneurship in the Tribal Youth of the state. Section 46

of the Chotanagpur Tenancy Act which is a protective shield to the interest of Tribal

properties is proving to be major roadblock for the Tribal youth access to the Bank loan

for getting in their business.

The relevant portion of Section 46 of the Chotanagpur Tenancy Act which reads as

under: -
 FLOW OF LOANS TO SCHEDULE TRIBES AND DEVELOPMENT OF
ENTREPRENEURSHIP IN SCHEDULE TRIBES
"46. Restrictions on transfer of their right by Raiyat. - (1) No transfer by a Raiyat of his

right in his holding or any portion thereof –

(a) by mortage or lease for any period expressed or implied which exceeds or might in

any possible event exceed five years, or

(b) by sale, gift or any other contract or agreement, shall be valid to any extent:

Provided that a Raiyat may enter into a 'bhugut bundha' mortgage of his holding or any

portion thereof for any period not exceeding seven years or if the mortgages be a

society registered or deemed to be registered under the Bihar and Orissa Co-operative

Societies Act, 1935 (B.& O. Act VI of 1935) for any period not exceeding fifteen years:

Provided further that -

(a) an occupancy-Raiyat who is a member of the Scheduled Tribes may transfer with

the previous sanction of the Deputy Commissioner his right in his holding or a

portion of his holding by sale, exchange, gift or will to another person who is a

member of the Scheduled Tribes and who is a resident within the local limits of

the area of the police-station within which the holding is situate;

(b) an occupancy-Raiyat who is a member of the Scheduled Castes or Backward

Classes may transfer with the previous sanction of the Deputy Commissioner his

right in his holding or a portion of his holding by sale exchange, gift, will or lease

to another person who is a member of the Scheduled Castes or, as the case may

be, Backward Classes and who is a resident within the local limits of the district

within which the holding is situate.

 FLOW OF LOANS TO SCHEDULE TRIBES AND DEVELOPMENT OF
ENTREPRENEURSHIP IN SCHEDULE TRIBES
(c) any occupancy-Raiyat may, transfer his right in his holding or any portion thereof

to a society or bank registered or deemed to be registered under the Bihar and

Orissa Co-operative Societies Act, 1935 (Bihar and Orissa Act VI of 1935), or to

the State Bank of India or a bank specified in column 2 of the First Schedule to

the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5

of 1970) or to a company or a corporation owned by, or in which less than fifty-

one per cent of the share capital is held by the State Government or the Central

Government or partly by the State Government, and partly by the Central

Government, and which has been set up with a view to provide agricultural credit

to cultivators; and

(d) any occupancy-Raiyat who is not a member of the Scheduled Tribes, Scheduled

Castes or backward classes, may, transfer his right in his holding or any portion

thereof by sale, exchange gift, will, mortgage or otherwise to any other person.

(2) A transfer by a Raiyat of his right in his holding or any portion thereof under sub-

section (1) shall be binding on the landlords.

(3) No transfer in contravention of sub-section (1) shall be registered or shall be in any

way recognized as valid by any Court, whatever in exercise, of civil, criminal or revenue

jurisdiction."

(4) ... ... ... ...

(5) ... ... ... ...

(6) ... ... ... ...

 FLOW OF LOANS TO SCHEDULE TRIBES AND DEVELOPMENT OF
ENTREPRENEURSHIP IN SCHEDULE TRIBES

This section is equally important for the protection of the title of Land of the Tribal

Raiyats. Hence any alteration in the above section is not possible. But it is a fact that

because of absolute restriction of alienation of land by the occupancy raiyat of the

aforementioned community under the aforementioned provisions, the members of that

community who have their land and hope for entering the business cannot get financial

assistance from Banks and FIs because of constrain in getting the property mortgage. If

the people of these communities are not allowed to lead a competitive life and chose

their way of living by taking financial assistance from the banks against creating

mortgage for setting up Industries and Business in their own state, they shall be

deprived of their right to enjoy their property and life.

As on September 2021 following are the figures of loans in the state of Jharkhand

- Total Loans : 10617615.90 Lakh

- Loans to ST : 396222.57 Lakh

- In % : 3.73%

Hence the 27% of tribal population has the credit exposure is only 3.73%, which shows

the blockage in the economic development of depriving the Tribal population from the

credit flow of Banks in the state.

Development is a comprehensive economic, social, cultural and political process, which

aims at the constant improvement of the well-being of the entire population and of all

individuals on the basis of their active, free and meaningful participation in development

and in the fair distribution of benefits resulting therefrom. It is a primary responsibility of

the State to create conditions favourable to the realisation of the right to development.
 FLOW OF LOANS TO SCHEDULE TRIBES AND DEVELOPMENT OF
ENTREPRENEURSHIP IN SCHEDULE TRIBES
The gap between the rich and the poor is gradually widening on the brink of being

unbridgeable. More than 51% of rural Tribal population and 28% of Urban Tribal

Population is forced to live under poverty line in the state. Economic empowerment is,

therefore, a basic human right and a fundamental right as part of right to live, equality

and of status and dignity to the poor, weaker sections, Dalits and Tribes.

Present schemes for Tribals

The government – both state as well as centre, has various schemes for the benefits of

the Schedule Tribes by providing or assisting in getting the financial assistance for the

business like:

 Stand up India Scheme

The objective of the Stand-Up India scheme is to facilitate bank loans between

Rs. 10 lakh and Rs. 1 Crore to at least one Scheduled Caste (SC) or Scheduled

Tribe (ST) borrower. This enterprise may be in manufacturing, services or the

trading sector.

 National ST Finance and Development Corporation Loan Scheme

NSTFDC provides Term Loans for viable business units costing up to Rs 50.00

Lakhs. Soft loans under the scheme are extended up to 90 % of the unit cost and

the balance is met by way of promoter’s contribution, subsidy and margin money

loans

 Mukhyamantri Rozgar Srijan Yojana

Loan upto 25lacs with subsidy of 40% for self-employment in Tribal youth.
 FLOW OF LOANS TO SCHEDULE TRIBES AND DEVELOPMENT OF
ENTREPRENEURSHIP IN SCHEDULE TRIBES
There are few other schemes from Jharkhand State Tribal Cooperative Development

Corporation and other agencies providing financial assistance to tribals for carrying out

small businesses and self-employment works.

But as we can notice a common problem with all the existing schemes. There is a

restriction on the upper limit of loan.

Why there is a restriction of amount of loan to the Tribal Entrepreneurs??

The Solution

- The State Government should look in for setting up of a Schedule Tribe Credit

Guarantee Fund (STCGF) for assuring availability of bank credit.

- The scheme to cover green-field projects as well as existing businesses.

- Enterprises, project/units being set up, promoted and run by Scheduled

Tribes in trading, primary, manufacturing and services sector ensuring asset

creation out of the funds deployed in the unit, under any State/Cental

Government Subsidy/Grant Scheme shall be considered

- Registered Companies and Societies/Registered Partnership Firms/Sole

Proprietorship firms/Individual ST Entrepreneur having more than 75%

shareholding by Scheduled Tribe entrepreneurs/promoters/members with

management control for the past 12months.

 FLOW OF LOANS TO SCHEDULE TRIBES AND DEVELOPMENT OF
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- The Scheduled Tribe promoter(s)/Partners/Society members shall not dilute

their stake below 75% in the enterprise during the currency of loan.

- without the hassles of collaterals / third party guarantees to the Schedule

Tribes.

- covering loans more than 100lacs without any upper limit.

- An Annual guarantee fee should be charged from the Tribal Entrepreneur for

this purpose which may depend on the nature of business and amount of

credit availed.

- Margin of the ST Entrepreneur should be maximum of 25% of the project

cost.

- The rate of interest should be lowest applicable rate of the bank for that rating

category

- extend the guarantee cover to the extent of 40-75% of the sanctioned amount

of the credit facility.

- Bank/FI can extend either term loan or working capital facility alone and be

eligible for a guarantee cover if it meets the other eligibility parameters.

 FLOW OF LOANS TO SCHEDULE TRIBES AND DEVELOPMENT OF
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- The guarantee cover will commence from the date of payment of guarantee

fee and shall run through the agreed tenure of the term credit in respect of

term credit / composite credit subject to payment of annual guarantee fee

within the time.

- The claim under the guarantee shall be admissible only after the lender

Bank/FI classify the account as NPA and would have initiated legal recovery

proceedings after exhausting all other recovery efforts.

- If there is any land belonging to Schedule Tribe and the project is being set

up on such land, and the purpose of the loan is civil construction on such

land, a tripartite agreement to be executed with ST borrower, Bank/FI and

STCGF with the permission of Deputy Commissioner of the concern district

for taking over the land and building appurtenant thereto, in case of default in

repayment by the borrower. The STCGF should have power to dispose the

land and property in such case and recover the default amount.

- The lending institution shall safeguard the primary securities created out of

the loan taken from the borrower in respect of the credit facility in good and

enforceable condition.

“Entrepreneurship” relates to entrepreneurs managing businesses which are oriented

towards innovation and growth technologies. The spirit of the above mentioned fund is

to support those Schedule Tribe entrepreneurs who will create wealth, value for the
 FLOW OF LOANS TO SCHEDULE TRIBES AND DEVELOPMENT OF
ENTREPRENEURSHIP IN SCHEDULE TRIBES
society, create jobs and in turn will develop confidence and at the same time promote

profitable businesses.

The major objective of the STCGF will be to promote financial inclusion for ST

entrepreneurs and to motivate them for further growth of ST communities and to

enhance direct and indirect employment generation for ST population in Jharkhand.

As the Chief Minister has also emphasized that the Banks should give importance to

project viability and secure the credit facility purely on the primary security of the assets

financed.

Further in order to encourage SC / ST borrowers to take advantage of credit facilities,

greater awareness among them about various schemes formulated by banks will have

to be created.

Monitoring

A special cell should be set up at controlling offices of the banks in Jharkhand for

monitoring the flow of credit to ST beneficiaries. The cell would also be responsible for

collection of relevant information / data from the branches, consolidation thereof and

submission of the requisite returns to STCGF and State Government. SLBC convenor

Bank should invite the representative of STCGF to attend SLBC meetings. A periodical

review should be made by the Controlling Offices of the banks in Jharkhand of the credit

extended to STs on the basis of returns and other data received from the branches.