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At present the domestic banks have to disburse 40% of the Net Bank Credit to Total Priority sector, out of which 18% should be total agricultural advances.
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The Foreign banks have been given a target of 32% of the Net Bank Credit to priority sector, however, there is no lower limit fixed for agriculture.
|
|
Domestic banks (both public sector and private sector banks) |
Foreign banks operating in India |
|
Total Priority Sector advances |
40 percent of NBC |
32 percent of NBC |
|
Total agricultural advances |
18 percent of NBC |
No target |
|
SSI advances |
No target |
10 percent of NBC |
|
Export credit |
Export credit does not form part of priority sector |
12 percent of NBC |
|
Advances to weaker sections |
10 percent of NBC |
No target |
Please note this important point:
-
Net Bank Credit is the figure reported in the fortnightly return submitted to RBI by the Banks. But, the outstanding deposits under the FCNR (B) and NRNR (Non-Resident Non-Reptriable Term Deposit Account) Schemes are excluded from net bank credit for computation of priority sector lending target/ sub-targets.
Weaker sections:
Under the above, the following have been defined by RBI have weaker sections of the society:
-
Small and marginal farmers with land holding of 5 acres and less and landless laborers, tenant farmers and share croppers.
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Artisans, village and cottage industries where individual credit limits do not exceed Rs. 50,000/-
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Beneficiaries of Swarnjayanti Gram Swarojgar Yojana (SGSY)
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Scheduled Castes and Scheduled Tribes
-
Beneficiaries of Differential Rate of Interest (DRI) scheme
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Beneficiaries under Swarna Jayanti Shahari Rojgar Yojana (SJSRY)
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Beneficiaries under the Scheme for Liberation and Rehabilitation of Scavangers (SLRS).
-
Self Help Groups (SHGs)
RBI Guidelines:
RBI keeps issuing guidelines for the Priority sector lending. Here are a few important points:
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The overall target set by the RBI for the priority sector lending is 40% of the adjusted net bank credit (ANBC) out of which 18% is fixed for agriculture sector and 10% for weaker sections of the society.
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Target Credit to women beneficiaries is 5%.
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Banks are supposed to give acknowledgement for loan applications received from weaker sections. The application should be disposed off as follows:
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Loans up to ` 25000 2 weeks
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Loans above ` 25000 8-9 weeks
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For SSI
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Loans up to ` 25000 2 weeks
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25000 up to 5,00,000 4 weeks
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Above ` 5 Lakh 8-9 weeks
-
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The loans applications of the priority sector can be rejected by the branch manager provided the rejection is later verified by the Divisional Manager / regional manager
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However, in case of SC/ ST, a branch manager can not reject the application. In this case, only a divisional manager / regional manager can do so.
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Commercial banks have been advised to link the tenor of loans to Housing Finance Companies (HFCs) in line with the average portfolio maturity of housing loans up to `20 lakh extended by HFCs to individual borrowers, otherwise such loans would not be eligible for classification under priority sector.
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Banks have been advised to ensure the end-use of funds strictly as per the guidelines on lending to priority sector.
