Page 40 - Banking Finance August 2021

ARTICLE

conventional energy based public utilities are eligible for Ancillary activities - Various activities like setting up of
priority sector classification. Moreover, the loans up to Rs. Agri-clinics and Agri-Business centres, Loans to custom
50 crores extended for start ups that are engaged in hiring units who maintain a fleet of farm machine and
agriculture and allied activities are now eligible for priority equipment like Tractor, bulldozers, well boring
sector classification. equipments, threshers, combiners etc and undertake
farm work for farmer on contract basis, loans sanctioned
Gist of revised Priority Sector Lending guidelines issued by for on-lending to agriculture sector to Micro Finance
Reserve bank of India on 04th September 2020 is appended: Institutions (MFIs), Primary Agriculture Credit Societies
The revised guideline is applicable to all commercial Banks, (PACS), Farmer's Service Societies (FSS), Large Sized
Regional Rural Banks (RRBs), Small Finance Banks (SFBs), Local Adivasi Multipurpose Societies (LAMPS), registered NBFC
Area Banks and Primary Urban Cooperative Banks (UCBs). (permitted as per RBI Directions) are classified under
priority sector. Moreover, loans to Food and Agro
Following activities are categorised under Priority Processing unit up to Rs. 100.00 Crore, loans sanctioned
Sector: to registered NBFCs and loans to MFIs for on-lending (up
to Rs. 10.00 lakh per borrower) to agriculture sector as
1. Agriculture - The lending to agriculture includes Farm
per Master direction of RBI in this regard are classified
Credits (Agriculture and Allied activities), Lending to
under Priority Sector Lending.
Agriculture Infrastructure and Ancillary Activities.
Farm Credit - The eligible entities are Farmers (including 2. Micro Small and Medium Enterprises - All credit
SHGs & JLGs), Groups of individual farmers, Proprietorship extended to MSMEs units as defined in gazette
firm of farmers directly engaged in agriculture and allied notification on credit flow to Micro, Small and Medium
activities. Moreover, corporate farmers, Farmer Producer Enterprises are classified under priority sector lending.
Organisation (FPOs/FPCs), Companies of Individual All loans to Khadi Village Industries (KVIs), Factoring
Farmers, Partnership Firms and cooperative of farmers transaction either through TReDS or 'with recourse' by
engaged in agriculture and allied activities are also eligible banks (except RRBs and UCBs) pertaining to MSME, loans
subject to an aggregate limit of Rs 2.00 Crore per sanctioned by banks (other than RRBs, SFBs and UCBs)
borrower. The major activities under farm credit are crop to Registered NBFCs and MFIs for on-lending (up to Rs.
loan, Medium and long term loan for agriculture and 20.00 lakh per borrower) to MSME sector as per Master
allied activities, loans for pre and post harvest activities, direction of RBI in this regard, loans extend by banks
loans to small and marginal farmers for purchase of (except UCBs) to cooperatives of producers in the
agricultural land, loans against pledge/hypothecation of decentralise sector like Village Artisans and Cottage
agricultural produce including warehouse receipt subject Industries are under classified under Priority Sector
to a limit of Rs. 50.00 lacs and loans to farmer for Lending. Also credit outstanding in General Credit Cards
installation of solar pump for agricultural purposes. Loans
to FPOs /FPCs undertaking farming with assured
marketing of their produce at a pre determined price
subject to maximum up to Rs. 5.00 crore per borrowing
are classified under priority sector.
Agriculture Infrastructure - Loans for construction of
storage facilities like warehouse, market yards, godowns,
silos including cold storage units and cold storage chains
irrespective of their location, soil conservation, watershed
management, plant tissue culture, agri-biotechnology,
bio-pesticides, bio-fertilizers, vermi-composting, seed
production etc. subject to aggregate sanction limit of Rs.
1.00 crore per borrower from entire banking system.

40 | 2021 | AUGUST | BANKING FINANCE