India’s leading bank,Reserve Bank Of India,on thursday 23rd April 2015,had revised the priority sector lending norms that directs banks to lend certain division by prescribing targets as a percentage. The main goal behind this is to boost credit flow to farmers, exports,education, small firms etc.
- All the banks have to lend atleast 40% of their net credit to priority sector.
- Those foreign banks with less than 20 branches would touch the target by 2020 and those foreign banks with more than 20 branches already have priority sector targets and sub-targets for agriculture and other weaker sections.
- New norms require banks to ensure that 8% of their loans go to small farmers etc
- RBI has asked banks to achieve this in phased way like 7% by March 2016 and 7.5% by March 2017
- Loan limits for housing loans and MFI loans under priority sector have also been revised.
- To achieve these targets, RBI would release some guidelines for priority sector and these guidelines would give banks some freedom to achieve their priority sector targets.
- Bank loans to food and other agro processing units would form a part of agriculture and export credit upto 32% will be eligible as part of priority sector for foreign banks .
- For other banks it would be upto 2%.
ABOUT RESERVE BANK OF INDIA
- It is India’s Central Banking institution that controls Monetary Policy of Indian Rupee.
- RBI was formed in April 1 in the year 1935 and has headquarters in Mumbai,Maharashtra
- Its current governor is Mr.Raghuram Rajan.
- RBI has 4 zonal offices and 19 regional offices all over India.
- It has got training colleges for officers at Chennai and Pune.
- Other zonal training centres are in Mumbai, Delhi and Kolkata and Chennai.