RBI revises priority sector lending norms

Mumbai, Apr 30 | Updated: May 1 2007, 05:30am hrs
The Reserve Bank of India (RBI) has issued revised guidelines on priority sector lending by the commercial banks in which it has revised the eligibility criteria.

In the revised guideline, RBI has decided to include those sectors as a part of the priority sector, that impact large section of the population, the weaker sections and the sectors which are employment-intensive such as agriculture, and tiny and small enterprises.

It has maintained the overall priority sector lending limit at 40% of adjusted net bank credit (ANBC) or credit equivalent of off-balance sheet exposure (whichever is higher) for domestic commercial banks and 32% for foreign banks.

For the purpose of calculating the overall limit, it said, that the ANBC or credit equivalent of off-balance sheet exposures will be computed with reference to the outstanding as on March 31 of the previous year.

The central bank has increased the cap for home loans under priority sector to Rs 20 lakh from Rs 15 lakh earlier. Loans up to Rs 20 lakh to individuals for purchase or construction of dwelling unit per family, (excluding loans granted by banks to their own employees) would within the ambit of priority sector, the RBI guideline said.

Besides, loans given for repairing damaged houses up to Rs 1 lakh in rural and semi-urban areas and up to Rs 2 lakh in urban and metropolitan areas would also be included as priority sector advances, it said.

The central bank has also increased the lending cap for educational loans to Rs 10 lakh form Rs 7.5 lakh for studies in India and Rs 20 lakh from Rs 15 lakh for studies abroad.

The RBI has excluded loans to software industry & investments made by banks in recapitalization bonds floated by the government and did not include small road and water transport operations from priority sector lending.

The revised guidelines are effective with immediate effect, RBI said.