The apex bank has issued directives to all SCBs, as it was found that most banks had not achieved the stipulated target for priority sector lending.
In the notification, the regulator also asked banks to strictly observe RBI directives on interest rates on loans, in accordance with the revised interest rate policy of April 2001.
It has been brought to our notice that some bank branches are demanding higher rates of interest even on loans upto Rs 2 lakh. said RBI in the notification.
As per the revised interest rate policy proposed by RBI in April 2001, interest rates for loans upto Rs 2 lakh should be below banks prime lending rate to creditworthy borrowers, and based on an objective and transparent policy.
In view of the fact that some bank branches were flouting the policy guidelines, RBI has directed banks to reiterate the policy instructions relating to interest rates on advances to banks controlling offices and branches.
A target of 40 per cent of net bank credit has been stipulated for lending to priority sector by domestic SCBs within which sub-targets of 18 per cent and 10 per cent of net bank credit have been stipulated for lending to agriculture and weaker sections.