Dalit youth in Bihar allege that Bank of Baroda discriminates in loan processing, complaint written to RBI

Pappu Kumar alleges that the bank discriminates against small applicants. While his small loan application is being strictly scrutinized, the bank has waived off Rs 44,481 crore of bad loans (NPAs) of 144 corporate companies in the last 8 years, which included many rich and influential borrowers. This difference shows that the bank is not treating the poor and Scheduled Caste youth fairly, which is against RBI rules.

Published on: 19 Jun 2025, 2:31 pm

Rohtas- There are many schemes running on paper to provide employment opportunities to the deprived and marginalized community, but do the Dalit and backward class youth actually get the benefit of these? Probably not! One such scheme is the ‘Suvidha’ loan of the National Scheduled Caste Finance and Development Corporation (NSFDC), under which various types of loans are provided to economically empower the Scheduled Caste people. 

“Suvidha Loan” provides financial assistance to Scheduled Caste people to start small business or expand existing business. In the hope of self-employment, two youths from Bihar have been visiting Bank of Baroda for the last three months to get this loan, but despite being eligible and having all the documents, the bank refused to give loan to both of them.

Pappu Kumar, a resident of Mauna village in Bihar, has filed a formal objection with the Reserve Bank of India (RBI) against Bank of Baroda (BOB), alleging non-compliance of National Scheduled Caste Finance and Development Corporation (NSFDC) guidelines and discriminatory treatment. 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 Sona branch has discriminated and harassed him, deliberately delayed the loan and arbitrarily rejected the application, thereby undermining the objective of the scheme which promotes financial inclusion and self-employment for marginalised communities. Vikas Kumar also has a similar complaint.

NSFDC, a central public sector enterprise under the Ministry of Social Justice and Empowerment, is a central public sector enterprise under whose facility scheme Scheduled Caste individuals 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 a Tata Tigor XT CNG model for self-employment/business. Under the scheme, loans are provided at subsidized rates to purchase vehicles, 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.

Even after 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 he filed an RTI to clarify the reasons for the delay, he received an incomplete and confusing response, which further strengthened his allegations of caste-based discrimination and misuse of power.

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

Similarly, expressing its inability to grant loan to Vikas Kumar, the bank wrote that Vikas’s annual income is 1 lakh 25 thousand and he has applied for a loan of 8,90,689/- for a commercial vehicle. As per the bank’s guidelines, loan can be given only up to three times the income. In such a situation, the bank said that Vikas can be given a loan of only Rs. 3,75,000/- as per three times his annual income. If he is given a loan for seven years (84 months), then according to this, the average EMI will be Rs 12000 to 15000 whereas Vikas’ average monthly income is Rs 10416/-. The bank wrote in its letter, “According to this, you do not have the repaying capacity, so we are unable to approve your loan as per the above documents and bank’s guidelines.”

The applicants say the bank misrepresented their loan application by processing it under agricultural finance terms inconsistent with the objectives of the NSFDC scheme. The NSFDC framework evaluates repayment capacity not based on the applicant’s current income but on the 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 an EMI of Rs 15,000-16,000, yet BoB neither sanctioned the loan nor considered this income potential, but applied commercial loan criteria 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 in violation of 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 the subsidized low interest rate (4-6%), which increased the financial burden on him.

Kumar also alleged that the bank discriminates against small applicants. He said that while his small loan applications are being strictly scrutinised, the bank has waived off Rs 44,481 crore of bad loans (NPAs) of 144 corporate companies in the last 8 years, which included many rich and influential borrowers. This difference shows that the bank is not treating the poor and Scheduled Caste youth fairly, which is against RBI rules.

Kumar has demanded RBI to direct BOB to approve his loan of Rs 8.91 lakh on the terms of NSFDC. He should be compensated Rs 8.91 lakh for financial loss and Rs 1 lakh for mental stress. RBI has been demanded to take action against the wrong practices of the bank and implement the NSFDC scheme properly.