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RBI revises norms for priority sector lending

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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.