Bhatti Word Falls Flat, Banks Insist on Cibil

Hyderabad: Directly contradicting an assurance by Deputy CM and finance minister Mallu Bhatti Vikramarka, the Cibil score, which shows the credit worthiness of applicants, has become the deciding factor in determining eligibility for the Rajiv Yuva Vikasam scheme. The scheme offers self-employment assistance of up to Rs,4 lakh.

This change has caused unrest among applicants. Incidentally, Wednesday is the day collectors have to submit the list of selected beneficiaries in their districts to the incharge ministers.

While Bhatti had vowed that the Cibil score would not be a mandatory criterion to apply for the scheme, bankers say that they have not received any written instructions from the finance department, headed by Bhatti, to not consider the Cibil score.

They said they had only seen in the media, Bhatti's statements to not consider the Cibil scores. There were no official orders.

The Rajiv Yuva Vikasam scheme, overseen by the finance department aims to provide financial support to youths from marginalised communities such as SC, ST, BC, EBC and minorities. The government received an overwhelming 16.21 lakh applications for the 4.91 lakh available units.

The government selected the candidates and forwarded the lists to banks for final approval. It has now emerged that banks are using the Cibil score as a key determinant in deciding whether to sanction loans to the applicants, in the absence of the finance department failing to issue written instructions.

The scheme is a hybrid model, combining government subsidies with bank loans. The government will contribute up to 70 per cent of the loan amount at the higher end, while banks cover the remaining 30 per cent.

Bhatti had promised to issue allotment letters to 5 lakh beneficiaries on June 2, Telangana Formation Day. However, sources now indicate that only 1 lakh beneficiaries will receive financial assistance that too only up to Rs.1 lakh on June 2. Those who applied for loans between Rs.2 lakh and Rs.4 lakh will have to wait months longer, adding to the frustration.

Nearly 84 per cent of applicants are from ST, SC, BC, and EBC communities, applying for loans up to Rs.4 lakh. These individuals are most likely to be left waiting, with the finance department citing financial constraints and planning to process them in phases over the next three to four months.

The decision to use Cibil scores for final approval has sparked protests, particularly among applicants from economically disadvantaged backgrounds, whose credit scores are often lower due to a history of irregular loan repayments. Many argue that banks have been hesitant to extend loans to these communities in the past, and when they do, repayments are often delayed, resulting in poor Cibil scores. Applicants fear that this new development will prevent them from benefiting from the scheme, despite fulfilling other eligibility criteria.

The scheme, which was launched on March 15, has been a source of hope for many. Youths from marginalised sections had flooded the application portal, leading the government to extend the deadline for submissions twice, from April 2 to April 14.

To qualify, applicants must meet income eligibility criteria of Rs.1.5 lakh per annum for rural areas and Rs.2 lakh for urban areas. The age limit was set at 21 to 60 years for rural applicants and 21 to 55 years for urban applicants. Initially, the finance department had made the ration card mandatory for availing of the scheme. This decision was overturned after sharp protests from applicants, and income certificates of up to Rs.1 lakh were allowed as an alternative.

As the selection process reaches the final stage, district collectors are expected to finalise the list of beneficiaries by Wednesday, and the list will then be forwarded to the respective incharge ministers of districts for approval. The final selection is expected to be completed by May 31, with allotment letters to be issued on June 2.

Applicants are urging the government to issue clear instructions to banks, asking them to reconsider the weight of Cibil scores, particularly for individuals applying for lower amounts, as many argue that delayed EMI payments should not disqualify them from a scheme designed to uplift disadvantaged communities.