Page 40 - Banking Finance JANUARY 2017

ARTICLE

SUSTAINING NATION'S

PRIORITY THROUGH

PRIORITY SECTOR

LENDING

CERTIFICATES

(PSLCS) - AN

INNOVATIVE

APPROACH

Priority Sector: was emphasized that commercial banks should
increase their involvement in financing priority
a) Priority sector refers to those sectors of economy which
sectors.
may not receive timely and adequate credit in the
absence of special dispensation. b) The description of the priority sectors formalized in the
year 1972 as per Informal study group on statistics
b) Sectors which "impact large sections of the population,
the weaker sections" relating to priority sector advances constituted by RBI
in May 1971.
c) Sectors which are "employment intensive such as agri-
culture, Micro, small and medium enterprises" c) In November 1974, banks were advised to raise the
share of priority sectors in their aggregate advances
d) Sectors which meets the basic needs of a common man to the level of 33 1/3 % by March 1979. This was later

e) Sectors which contributes more to GDP of the country revised on the recommendations of Dr. K.R.
Krishnaswamy Committee; and in March 1980, all com-
Background: mercial banks were advised to achieve the target un-
a) In National Credit council meeting held in July 1968, it der Priority Sector Lending (PSL) 40 percent of aggre-
gate bank advances by 1985.
About the author
d) An internal working group under the chairmanship of
Shri C.S. Murthy examined the concept of Priority Sec-
U Sethupitchai
Chief Manager (Faculty) tor, targets and sub-targets. (wef.30.04.2007)
Union Bank of India e) Reserve Bank of India in August 2011 set up a commit-
Staff College tee to re-examine the existing classification and sug-
Bangalore
gest revised guidelines (Chairman: Shri M V Nair). Some

40 | 2017 | JANUARY | BANKING FINANCE

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