PRIORITY SECTOR LENDING Priority Sector lending includes lending to those sectors that impact large sections o the

population! the "ea#er sections and the sectors "hich are employment$intensi%e such as agriculture! and tiny and small enterprises& C'TEGORIES O( PRIORITY SECTOR )'* 'griculture )Direct (inance* Direct (inance to agriculture includes short term and long term loans gi%en or agriculture and allied acti%ities )dairy! ishery! piggery! poultry! +ee$#eeping! etc&* directly to indi%idual armers! Sel ,elp Groups )S,Gs* or -oint Lia+ility Groups )-LGs* o indi%idual armers "ithout limit and to others )such as corporate! partnership irms! and institutions* upto certain limits or ta#ing up agriculture.allied acti%ities& Direct inance includes/$ 0 Short$term loans or raising crops! i&e& or crop loans including traditional. non$traditional plantations and horticulture& 0 'd%ances up to Rs& 12 La#h against pledge.hypothecation o agricultural produce )including "arehouse receipts* or a period not e3ceeding 41 months! irrespecti%e o "hether the armers "ere gi%en crop loans or raising the produce or not& 0 5an# loans to Primary 'gricultural Credit Societies )P'CS*! (armers6 Ser%ice Societies )(SS* and Large$si7ed 'di%asi 8ulti Purpose Societies )L'8PS* ceded to or managed. controlled +y such +an#s or on lending to armers or agricultural and allied acti%ities& 0 9or#ing capital and term loans or inancing production and in%estment re:uirements or agriculture and allied acti%ities& 0 Loans to small and marginal armers or purchase o land or agricultural purposes& 0 Loans to distressed armers inde+ted to non$institutional lenders! against appropriate collateral or group security& 0 Loans granted or pre$har%est and post$har%est acti%ities such as spraying! "eeding! ting! grading! sorting! processing and transporting underta#en +y indi%iduals! S,Gs cooperati%es in rural areas&

0 E3port credit to armers or e3porting their o"n arm produce& 0 Loans to armers under ;isan Credit Card Scheme (inance to others )corporate! partnership irms and institutions* Loans to corporate including armers< producer companies o indi%idual armers! partnership irms and co$operati%es o armers directly engaged in 'griculture and 'llied 'cti%ities! %i7&! dairy! ishery! animal hus+andry! poultry! +ee$#eeping and sericulture )up to cocoon stage* up to an aggregate limit o 1 crore per +orro"er or the ollo"ing purposes& 0 Short$term loans or raising crops! i&e& or crop loans& This "ill include traditional.non$traditional plantations! horticulture and allied acti%ities& 0 8edium = long$term loans or agriculture and allied acti%ities )e&g& purchase o agricultural implements and machinery! loans or irrigation and other de%elopmental acti%ities underta#en in the arm! and de%elopment loans or allied acti%ities*& 40 Loans or pre$har%est and post$har%est acti%ities! %i7&! spraying! "eeding! har%esting! grading and sorting& 0 E3port credit or e3porting their o"n arm produce& 'griculture )Indirect (inance* (inance or 'griculture and 'llied 'cti%ities granted to corporate! partnership irms and institutions engaged in agriculture and allied acti%ities )dairy! ishery! animal hus+andry! poultry! +ee$#eeping and sericulture )up to cocoon stage*/ a* such as /$ 0 Short$term loans or raising crops! i&e& or crop loans& 0 8edium = long$term loans or agriculture and allied acti%ities )e&g& purchase o agricultural implements and machinery! loans or irrigation and other de%elopmental acti%ities underta#en in the arm! and de%elopment loans or allied acti%ities*& 0 Loans or pre$har%est and post$har%est acti%ities such as spraying! "eeding! har%esting! grading and sorting&

0 Loans up to 12 la#h against pledge.hypothecation o agricultural produce )including "arehouse receipts* or a period not e3ceeding 41 months! irrespecti%e o "hether the armers "ere gi%en crop loans or raising the produce or not& 0 E3port credit to corporate! partnership irms and institutions or e3porting their o"n arm produce& 0 Loans up to 2 crore to Producer Companies set up e3clusi%ely +y only small and marginal armers or agricultural and allied acti%ities& 0 5an# loans to Primary 'gricultural Credit Societies )P'CS*! (armers6 Ser%ice Societies )(SS* and Large$si7ed 'di%asi 8ulti Purpose Societies )L'8PS* other than those co%ered under direct inance to agriculture& Other Indirect (inance includes/$ 0 Loans up to 4 crore per +orro"er to dealers .sellers o ertili7ers! pesticides! seeds! cattle eed! poultry eed! agricultural implements and other inputs& 0 Loans or setting up o 'griclinics and 'gri+usiness Centres& 0 Loans up to Rs& 2 crore to cooperati%e societies o armers or disposing o the produce o mem+ers& 0 Loans to Custom Ser%ice >nits managed +y indi%iduals! institutions or organi7ations "ho maintain a leet o tractors! +ulldo7ers! "ell$+oring e:uipment! threshers! com+ines! etc&! and underta#e arm "or# or armers on contract +asis& 0 Loans or construction and running o storage acilities )"arehouse! mar#et yards! godo"ns and silos*! including cold storage units designed to store agriculture produce.products! irrespecti%e o their location& )I the storage unit is a micro or small enterprise! such loans "ill +e classi ied under loans to 8SE sector*& 0 Loans to 8(Is or on$lending to armers or agricultural and allied acti%ities as per the conditions speci ied in paragraph ?III o this circular& 10 Loans sanctioned to NGOs! "hich are S,G Promoting Institutions! or on$lending to

mem+ers o S,Gs under S,G$5an# Lin#age Programme or agricultural and allied acti%ities& 0 Loans sanctioned to RR5s or on$lending to agriculture and allied acti%ities& +* The aggregate loan limit per +orro"er more than Rs& 1 crore in respect o +orro"ers under (inance to others listed under direct inance& )'* 8icro = Small Enterprises / Direct inance to 8SE includes/$ i* 8anu acturing Enterprises )a* 8icro )manu acturing* Enterprises Enterprises engaged in the manu acture.production! processing or preser%ation o goods and "hose original cost o in%estment in plant and machinery )e3cl& land = +uilding and other items as per 8S8ED 'ct 1@@A* does not e3ceed Rs& 12 La#h! irrespecti%e o the location o the unit& )+* Small )manu acturing* Enterprises Enterprises engaged in the manu acture.production! processing or preser%ation o goods and "hose original cost o in%estment in plant and machinery )e3cl& land and +uilding and other items as per the 'ct* is more than Rs& 12 La#h +ut does not e3ceed Rs& 2 crore! irrespecti%e o the location o the unit& ii* Ser%ice Enterprises )a* 8icro )Ser%ice* Enterprises Enterprises engaged in pro%iding.rendering o ser%ices and "hose original cost o in%estment in e:uipment )e3cl& land and +uilding and urniture! ittings and other items not directly related to the ser%ice rendered* does not e3ceed Rs& 4@ La#h! irrespecti%e o the location o the unit& )+* Small )ser%ice* Enterprises Enterprises engaged in pro%iding.rendering o ser%ices and "hose original cost o in%estment in e:uipment )e3cl& land and +uilding and urniture! ittings and such items* is

more than Rs& 4@ La#h +ut do not e3ceed Rs& 1 crore! irrespecti%e o the location o the unit& +* Other acti%ities 0 Loans or ood and agro processing "ill +e classi ied under 8icro and Small Enterprises! pro%ided the units satis y in%estments criteria prescri+ed or 8icro and Small Enterprises! as pro%ided in 8S8ED 'ct! 1@@A& 0 The small and micro )ser%ice* enterprises also include small road = "ater transport operators! small +usiness! pro essional = sel $employed persons! and other ser%ice enterprises engaged in acti%ities as listed in the 'ct and satis y the in%estment in e:uipment criteria i&e& not e3ceeding Rs& 4@ La#h and Rs& 1 crore respecti%ely& B0 (inance granted +y commercial +an#s to 8SE sector )+oth m g& and ser%ices* "hich satis y the de inition o 8S8ED 'ct 1@@A are eligi+le or +eing classi ied under priority sector lending& 0 5an# loans to 8icro and Small Enterprises )8SE* engaged in pro%iding or rendering o ser%ices "ill +e eligi+le or classi ication as direct inance to 8SE Sector under priority sector up to an aggregate loan limit o 1 crore per +orro"er.unit! pro%ided they satis y the in%estment criteria or e:uipment as de ined under 8S8ED 'ct! 1@@A& 0 'll ad%ances granted to ;hadi = ?illage Industries );?I* sector irrespecti%e o their original in%estment in plant = machinery are also eligi+le or consideration under su+target )A@C* o 8SE segment "ithin the priority sector& Indirect inance to 8SE )m g& as "ell as ser%ice* sector includes/$ 0 Persons in%ol%ed in assisting the decentralised sector in the supply o inputs to and mar#eting o outputs o artisans! %illage and cottage industries& 0 'd%ances to cooperati%es o producers in the decentralised sector %i7& artisans %illage and cottage industries& 0 Loans granted +y +an#s to 8icro (inance Institutions on or a ter! 'pril 4! 1@44 or onlending to micro and small enterprises )manu acturing as "ell as ser%ices* are eligi+le or

priority sector status su+Dect to the compliance o guidelines& )C* 8icro Credit 0 Loans o %ery small amounts! not e3ceeding Rs&2@!@@@ per +orro"er pro%ided directly +y +an#s either to +orro"ers or indirectly through a S,G.-LG mechanism pro%ided the +orro"er6s household annual income in rural areas does not e3ceed Rs& A@!@@@.$ and Rs& 41@!@@@.$ in non$rural areas& 0 Loans outstanding under loans or general purposes under General Credit Cards )GCC*& I the loans under GCC are sanctioned to 8icro and Small Enterprises! such loans should +e classi ied under respecti%e categories o 8icro and Small Enterprises& 0 O%erdra ts! up to 2@!@@@ )per account*! granted against +asic +an#ing . sa%ings accounts pro%ided the +orro"ers household annual income in rural areas does not e3ceed &A@!@@@.$ and or non$rural areas it should not e3ceed 4!1@!@@@.$& 0 Loans sanctioned +y +an#s directly to indi%iduals or setting up o $grid solar and other o $grid rene"a+le energy solutions or households& )D*State sponsored organi7ation or SC.ST 'd%ances sanctioned to State Sponsored Organisations or Scheduled Castes. Scheduled Tri+es or the speci ic purpose o purchase and supply o inputs to and.or the mar#eting o the outputs o the +ene iciaries o these organisations& )E* Education Loans granted to indi%iduals or educational purposes up to Rs& 4@ la#h or studies in India and Rs& 1@ la#h or studies a+road& Loans granted to educational institutions "hich :uali y under 8S8ED 'ct 1@@A are eligi+le to +e classi ied under priority sector under 8SE )ser%ices* pro%ided they :uali y under 8S8ED 'ct 1@@A& )(* ,ousing E0 Loans up to Rs& 12 La#h in metropolitan centres "ith population a+o%e 4@ La#h and Rs& 42 La#h in other centres to indi%iduals or purchase.construction o a d"elling unit

per amily! e3cluding loans granted +y +an#s to their o"n employees! "&e& & @4&@E&1@44 )upto 8arch 1@44 the limit "ould +e Rs& 1@ La#h*& 0 Loans gi%en or repairs to the damaged d"elling units o amilies up to Rs& 1 La#h in rural and semi$ur+an areas and up to Rs& 2 La#h in ur+an and metropolitan areas& 0 'ssistance gi%en to any go%ernmental agency or construction o d"elling units or or slum clearance and reha+ilitation o slum d"ellers! su+Dect to a ceiling o Rs& 4@ La#h o loan amount per d"elling unit& 0 'ssistance gi%en to a non$go%ernmental agency.,(Cs appro%ed +y the N,5 or the purpose o re inance.on lending or purchase.construction.reconstruction o d"elling units or or slum clearance and reha+ilitation o slum d"ellers! su+Dect to a ceiling o loan component o Rs& 4@ La#h per d"elling unit& )>pto 1E&@E&1@41 the ceiling "ould +e Rs& 2 La#h* 0 The eligi+ility under priority sector loans to ,(Cs is restricted to i%e percent o the indi%idual +an#6s total priority sector lending! on an ongoing +asis& The maturity o +an# loans should +e co$terminus "ith a%erage maturity o loans e3tended +y ,(Cs 0 Loans sanctioned +y +an#s or housing proDects e3clusi%ely or the purpose o construction o houses only to economically "ea#er sections and lo" income groups! the total cost o "hich does not e3ceed 4@ la#h per d"elling unit! "ill :uali y or priority sector status& (or the purpose o identi ying the economically "ea#er sections and lo" income groups! the amily income limit o Rs&4!1@!@@@ per annum! irrespecti%e o location! is prescri+ed& )G* 9ea#er Sections / includes /$ 0 Small and marginal armers "ith land holding o 2 acres and less! and landless la+ourers! tenant armers and share croppersF 0 'rtisans! %illage and cottage industries "here indi%idual credit limits do not e3ceed Rs& 2@!@@@ and +ene iciaries o National Rural Li%elihood 8ission )NRL8*&

0 SC and ST and DRI +ene iciaries& 0 5ene iciaries under S"arna -ayanti Shahari Ro7gar YoDana )S-SRY* and Scheme or Reha+ilitation o 8anual Sca%engers )SR8S*F 0 'd%ances to Sel ,elp Groups and distressed poor to prepay their de+t to in ormal sector& 0 Loans to distressed poor to repay their de+t to in ormal sector against appropriate collateral or group security& 0 Loans granted under )a* to )i* a+o%e to persons rom minority communities as may +e noti ied +y Go%ernment o India rom time to time& ),* E3port credit applica+le or +oth domestic and oreign +an#s as per the re%ised target mentioned& Other Guidelines/ ollo"ing "ill also +e eligi+le to +e classi ied as priority sector 0 In%estments +y +an#s in securitised assets o other +an#s and inancial institutions! representing loans to %arious categories o priority sector! pro%ided original loans ul ill the Reser%e 5an# o India guidelines on securitisation& 20 Outright purchases o any loan pro%ided the loans purchased are eligi+le to +e categori7ed under priority sectorF 0 In%estments in eligi+le assets +y +an#s in Inter 5an# Participation Certi icates )I5PCs*! on a ris# sharing +asis! and are held or at least 4G@ days rom the date o in%estment are also eligi+le& 0 The targets and su+$targets under priority sector lending "ould +e lin#ed to 'dDusted Net 5an# Credit )'N5C* i&e& Net 5an# Credit plus in%estments made +y +an#s in non$SLR +onds held in ,T8 category or Credit E:ui%alent amount o O $5alance Sheet E3posures )O5E*! "hiche%er is higher! as on 8arch B4 o the pre%ious year& Targets = Su+$targets The targets and su+$targets set under priority sector lending or domestic and oreign +an#s operating in India are gi%en hereunder& (or oreign +an#s "ith 1@ and a+o%e +ranches! the targets

ha%e to +e achie%ed "ithin a ma3imum period o i%e years starting rom @4&@E&4B and ending on B4&@B&4G& The oreign +an#s ha%e to su+mit their action plan latest +y B4&41&41 or appro%al +y R5I& Parameter Domestic commercial +an#s. (oreign +an#s "ith 1@ and a+o%e +ranches (oreign +an#s "ith less than 1@ +ranches Total Priority Sector 'd%ances E@C o 'N5C or credit e:ui%alent amount o o +alance sheet e3posure "hiche%er is higher B1C o 'N5C or credit e:ui%alent amount o o +alance sheet e3posure "hiche%er is higher Total agricultural ad%ances 4GC o 'N5C or credit e:ui%alent amount o o +alance sheet e3posure "hiche%er is higher& )Indirect lending in e3cess o E&2C o 'N5C or credit e:ui%alent amount o o +alance sheet e3posure "ill not +e rec#oned or 4GC +ut all "ill +e ta#en or E@C target or priority sector ad%ances*

No target& (orm part o total priority sector target 8SE ad%ances 'd%ances to 8SE "ill +e computed or priority sector target o E@C o 'N5C or credit e:ui%alent amount o o +alance sheet e3posure "hiche%er is higher& 4@C o 'N5C or credit e:ui%alent amount o o +alance sheet e3posure "hiche%er is higher 8icro enterprises "ithin 8icro = small enterprises sector i* E@C o total ad%ances to 8SE sector should go to 8icro )8 g&* enterprises ha%ing in%estment in plant = machinery upto Rs! 2 La#h No target& (orm part o total priority sector target Aand 8icro )ser%ice* enterprises ha%ing in%estment in e:uipment upto Rs& 1 La#h& ii* 1@C o total ad%ances to 8SE should go to 8icro

)8 g&* enterprises ha%ing in%estment in P=8 a+o%e Rs& 2 La#h and upto Rs& 12 La#h and 8icro )ser%ice* ha%ing in%estment in e:uipment a+o%e Rs& 1 La#h and upto Rs& 4@ La#h& )i&e& A@C o 8SE ad%ances should go to 8icro Enterprises*& E3port Credit E3port credit to eligi+le acti%ities under agriculture and 8SE "ill +e rec#oned or priority sector lending under respecti%e categories No target& (orm part o total priority sector target 'd%ances to "ea#er sections 4@C o 'N5C or credit e:ui%alent amount o o +alance sheet e3posure "hiche%er is higher& No target& (orm part o total priority sector target No target DRI Scheme 4C o total ad%ances outstanding as at the end o the pre%ious year o "hich

E@C should go to SC.ST No target Penalties or Non$achie%ement o Priority Sector lending targets The short all in lending to priority sector in respect o domestic scheduled commercial +an#s shall +e allocated or contri+ution to the Rural In rastructure De%elopment (und )RID(* esta+lished +y N'5'RD or unds "ith other (inancial Institutions as speci ied +y R5I& The oreign +an#s ha%ing short all to stipulated priority sector lending target.su+$targets "ill +e re:uired to contri+ute to (unds to +e set up "ith Small Industries De%elopment 5an# o India )SID5I* or "ith other (inancial Institutions! as may +e stipulated +y R5I since they ha%e target only in respect o non$agriculture sector& Other common guidelines/ 0 Go%t& 'gencies should complete applications in respect o go%t& sponsored schemes li#e SGSY! etc& and in other areas the +an# sta should help the +orro"ers or this purpose& 0 5an#s should gi%e ac#no"ledgement or loan applications recei%ed rom "ea#er sections& 0 'll loan applications up to a credit limit o Rs& 12!@@@ should +e disposed o "ithin a ortnight and those or o%er Rs& 12!@@@! "ithin G to H "ee#s& I0 'll loan applications or 8icro and Small Enterprises up to a credit limit o Rs& 12!@@@ should +e disposed o "ithin 1 "ee#s and those up to Rs& 2 la#h "ithin E "ee#s! pro%ided the loan applications are complete in all respects and are accompanied +y a <chec# list<& 0 5ranch 8anagers may reDect applications )e3cept in respect o SC.ST* pro%ided the cases o reDection are %eri ied su+se:uently +y the Di%isional.Regional 8anagers& In the case o proposals rom SC.ST! reDection should +e at a le%el higher than that o 5ranch 8anager& 0 ' register should +e maintained at the +ranch! "herein the date o receipt! sanction.reDection.dis+ursement "ith reasons there ore! etc&! should +e recorded& The register should +e made a%aila+le to all inspecting agencies&

0 5an#s may dis+urse all loans or agricultural purposes in cash "hich "ill acilitate dealer choice to +orro"ers and oster an en%ironment o trust& ,o"e%er! +an#s may continue the practice o o+taining receipts rom +orro"ers& 0 Repayment schedule should +e +ased on surplus a%aila+le! sustenance re:uirements! li e o asset! etc and not on Jad hocK manner& (or people a ected +y natural calamities! restructuring o the loans may +e considered as per R5I guidelines& 0 Rate o interest on %arious categories o priority sector ad%ances should +e as per the R5I directi%es +eing issued rom time to time& 0 No ser%ice charges.inspection charges or loans upto Rs& 12!@@@.$ and a+o%e the limit! +an#s may charge as appro%ed +y their respecti%e 5oards& 0 5an#s may "ai%e insurance or all categories o priority sector ad%ances upto and inclusi%e o Rs& 4@!@@@.$ and or 8icro = Small Enterprises upto Rs& 12!@@@.$& ,o"e%er! insurance on %ehicles and other e:uipments "here%er it is compulsory as per La" or or a%ailing re inance! etc& must +e insisted upon& 0 5an#s should ma#e arrangements or ta#ing photographs o priority sector +orro"ers "here%er it is re:uired at the cost should also +e +orne +y the +an#s& 0 'll 5ranch 8anagers should +e %ested "ith ade:uate po"ers to sanction proposals rom "ea#er sections! i not! should e3ist at district le%el so as to e3pedite the sanctions.decisions promptly& 0 5an#s should put in place a suita+le machinery to loo# into complaints! i any! +eing recei%ed rom +orro"ers and the name and address o the o icer "ith "hom complaints can +e lodged should also +e displayed on the Notice 5oard o e%ery +ranch& SO>RCE/ R5I 8& CIR& )>pdated up to 4I&4@&41* o@o@o@o@o G