The Reserve Bank of India (RBI), on Thursday, said that medium enterprises, social infrastructure and renewable energy would form part of priority sector in addition to the existing categories.
“The distinction between direct and indirect agriculture is dispensed with,” the RBI said.
The revised guidelines are operational with immediate effect.
However, it said the priority sector loans sanctioned under the earlier guidelines would continue to be classified under priority sector till repayment/maturity/ renewal.
It prescribed a target of 8 per cent for the small and marginal farmers within agriculture. RBI asked banks to achieve this in a phased manner, that is, 7 per cent by March 2016 and 8 per cent by March 2017.
A target of 7.5 per cent has been prescribed for micro enterprises, which also has to be achieved in a phased manner, that is, 7 per cent by March 2016 and 7.5 per cent by March 2017.
There is no change in the target of 10 per cent for weaker sections, it added
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 March 31, 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, the RBI said.
Foreign banks“Foreign banks with less than 20 branches will move to total priority sector target of 40 percent 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,” it added.
Bank loans to food and agro processing units will form part of agriculture. Export credit up to 32 per cent 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 per cent.
The loan limits for housing loans and MFI loans qualifying under priority sector have been revised.
RBI said the priority sector non-achievement would be assessed on a quarterly average basis at the end of the respective year from 2016-17 onwards, instead of annual basis as at present.
