Expanding the definition of priority sector, the Reserve Bank of India (RBI) has included loans to medium enterprises, social infrastructure and renewable energy under priority sector lending (PSL) and removed the bifurcation of direct and indirect lending to agriculture.
The central bank has also prescribed sub-targets within the overall minimum 18% target for agriculture lending. Now, banks will have to lend a minimum of 8% of their adjusted net bank credit to small and marginal farmers and 7.5% to micro enterprises by March 2017.
Under the current norms, banks are expected to give 40% of their adjusted net bank credit to priority sector, which includes agriculture and allied activities, small and micro enterprises and also education and home loans up to a certain limit.
Within 40%, banks must lend 18% to agriculture and allied activities.
For foreign banks with 20 branches and above, the sub-targets for small and marginal farmers and micro enterprises would be made applicable after 2018 after a review in 2017, the RBI said in a notice.
Foreign banks with less than 20 branches will move to total priority sector target of 40% of ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher, on par with other banks by 2019-20, and the sub-targets for these banks would be decided in due course. Under export credit, incremental loans over corresponding date of the preceding year will be reckoned only up to 2% of ANBC for PSL.
Further, the RBI also increased the ceiling on affordable home loans to be considered under PSL. Loans towards home purchases in metros of up to R28 lakh against the earlier R25 lakh will be under PSL. For loans to purchase homes in other centres, the ceiling has been raised by R5 lakh to R20 lakh. Bank loans up to a limit of R5 crore per borrower for building social infrastructure for activities like schools, healthcare, drinking water and sanitation facilities in Tier-II to Tier-VI centres will be under PSL.
Loans up to a limit of R15 crore to borrowers for purposes like renewable energy based power generators, power generators, wind mills, micro-hydel plants and for non-conventional energy based public utilities, viz., street lighting systems, and remote village electrification, will come under PSL. For individual households, the loan limit will be R10 lakh per borrower, the RBI said.
Loans to medium enterprises, social infrastructure and renewable energy brought under PSL.
Bifurcation of direct and indirect lending to agriculture removed.
Loans towards home purchases in metros of up to Rs 28 lakh against the earlier R25 lakh will be under PSL.
For loans to purchase homes in other centres, the ceiling has been raised by Rs 5 lakh to Rs 20 lakh.