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ARTICLE
of the recommendations were accepted with effect the total priority sector target of 40 percent of ANBC or
from July 20, 2012. CEOBE, whichever is higher, in a phased manner by 2020.
f) An Internal Working Group (IWG) was set up in July Further banks have also been directed to ensure that their
2014 under the chairmanship of Lily Vadera to revisit share of lending to non corporate farmers does not fall
the existing priority sector guidelines. Based on the rec- below the system wide average for the last three years of
ommendations and comments received from various direct lending to non-corporate farmers.
stake holders the revised guidelines on priority sector
are laid down with effect from April 23, 2015. Non achievement of Benchmarks:
a) Shortfall in lending to priority sector target/sub-target
Components of Priority Sector: on the above mentioned parameters shall be allocated
amounts for contribution to the Rural Infrastructural
a) Agriculture
Development Fund (RIDF) established with NABARD
b) Micro Small ANC Medium Enterprises and other funds with NABARD/NHB/SIDBI/MUDRA
c) Education and other financial institutions as decided by RBI from
d) Housing time to time
b) The deposit under various funds will be called upon by
e) Export Credit
NABARD or such other Financial Institutions as per the
f) Social Infrastructure
terms and conditions of the scheme
g) Renewable energy
c) From 2016-17 onwards, the achievement will be arrived
h) Other Priority Sectors at the end of financial year based on the average of
i) Investments by banks in eligible securitized assets priority sector target / sub- target achievement at the
end of each quarter
j) Transfer of assets through Direct Assignment/outright
purchase d) Interest rates on RIDF is inversely proportional to the
shortfall in achieving benchmark levels
k) Inter-bank participation certificate
l) Priority Sector Lending Certificates (PSLCs) Agricultural credit shortfall Applicable Rate of
to ANBC Interest
Benchmarks stipulated by RBI: Less than 5 % Bank Rate- 2%
Sl Parameter Benchmark Over 5% and up to 10% Bank Rate-3%
No Over 10 % Bank Rate - 4%
1 Total Priority Sector Advances 40% of ANBC (RBI circular dated 10.12.2014)
2 Total Agriculture 18% of ANBC e) Non-achievement of Priority Sector targets and sub-
W/W Small & Marginal Farmers 08%
targets will be taken in consideration while granting
3 Advances to Weaker Section 10.00% of ANBC regulatory clearances/ approvals
4 Lending to Women Beneficiaries 05.00% of ANBC
Priority Sector Lending Certificate (PSLC):
5 Lending to Micro Enterprises 7.50 % of ANBC
6 Lending to Minority communities 15.00% of Background:
Priority Sector The Raghuram Rajan Committee on Financial Sector Re-
Lending forms had, inter alia, recommended introduction of "prior-
ity sector lending certificates (PSLCs)" to implement the
For domestic and foreign banks with 20 branches and above priority sector lending in the country. The Committee be-
the targets under priority sector are at par now. Foreign lieved that the process by which the priority sector man-
banks with less than 20 branches are required to achieve dates are implemented should be reformed to emphasize
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