RBI/2006-2007/358
RPCD. No. Plan. BC. 84 /04.09.01/
2006-07 April 30, 2007 The Chairman/ Managing
Director/
Chief Executive Officer [All
scheduled commercial banks
(excluding Regional Rural
Banks)] Dear Sir, GUIDELINES
ON LENDING TO PRIORITY SECTOR – Revised As announced
in the Reserve Bank's Annual
Policy Statement for the year 2005-06, the prescriptions relating to priority
sector lending have been modified and several new areas included from time to
time. There is a view that enlargement of areas has resulted in loss of focus.
There have also been suggestions for a further review of the eligibility criteria
and other related aspects. Further, it is argued that only those sectors that
impact large sections of the population, the weaker sections and the sectors which
are employment-intensive such as agriculture, and tiny and small enterprises should
be eligible for inclusion under the priority sector. 2. In this context,
an Internal Working Group was set up in Reserve Bank (Chairman: Shri C. S. Murthy)
to examine the need for continuance of priority sector lending prescriptions;
review the existing policy on priority sector lending including the segments constituting
the priority sector, targets and sub-targets, etc.; and to recommend changes,
if any, required in this regard. The recommendations of the Group have been examined
in the light of the comments/suggestions received from the banks, financial institutions,
Non-Banking Financial Companies, Associations of industries, media, public and
Indian Banks’ Association, and accordingly the guidelines on priority sector
lending have been revised. The detailed revised
guidelines are enclosed.
3. These guidelines take into account the
revised definition of small and micro enterprises as per the Micro, Small and
Medium Enterprises Development Act, 2006.
4. The revised guidelines will
be effective with immediate effect. In case, any bank has any
difficulty in complying with the revised priority sector guidelines, they may
approach Reserve Bank of India with appropriate reasons and time frame for compliance.
5. We are separately forwarding the revised formats of half-yearly and
yearly returns for reporting data on priority sector advances. 6. Please
acknowledge receipt. Yours faithfully, (C.
S. Murthy)
Chief General Manager-in-Charge |