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RBI issued revised guidelines on Priority Sector Lending

Apr 29, 2015 17:39 IST

Reserve Bank of India (RBI) on 23 April 2015 issued revised guidelines on Priority Sector Lending. These revised guidelines will replace the existing guidelines issued on 1 July 2014 and became effective from the date of issue.

Main highlights of the revised guidelines
• In addition to the existing categories, the new guidelines add Medium Enterprises, Social Infrastructure and Renewable Energy under priority sector. As a result, the number of categories under priority sector lending are agriculture, micro, small and medium enterprises, export credit, education, housing, social infrastructure, renewable energy and others.
• The distinction between direct and indirect agriculture is dispensed with.
• A target of 8 percent of ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher, has been prescribed for Small and Marginal Farmers within agriculture, to be achieved in a phased manner, that is, 7 percent by March 2016 and 8 percent by March 2017.
• A target of 7.5 percent of ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher, has been prescribed for Micro Enterprises, to be achieved in a phased manner, that is, 7 percent by March 2016 and 7.5 percent by March 2017.
• There is no change in the target of 10 percent of ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher, for Weaker Sections.
• Foreign Banks with 20 branches and above already have priority sector targets and sub-targets for Agriculture and Weaker Sections, which are to be achieved by 31 March 2018 as per the action plans submitted by them and approved by RBI.
• The sub-targets for Small and Marginal Farmers and Micro Enterprises would be made applicable post 2018 after a review in 2017.
• Foreign banks with less than 20 branches will move to Total Priority Sector Target of 40 percent of ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher, on par with other banks by 2019-20, and the sub-targets for these banks, if to be made applicable post 2020, would be decided in due course.
• Bank loans to food and agro processing units will form part of Agriculture.
• Export credit up to 32 percent of ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher, will be eligible as part of priority sector for foreign banks with less than 20 branches.
• For other banks, the incremental export credit over corresponding date of the preceding year will be reckoned up to 2 percent of ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher.
• The loan limits for housing loans and MFI loans qualifying under priority sector have been revised.
• The priority sector non-achievement will be assessed on quarterly average basis at the end of the respective year from 2016-17 onwards, instead of annual basis as at present.

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Read more Current Affairs on: Reserve Bank of India

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