New RBI norms to push more loans to farmers

By: | Published: July 17, 2015 12:12 AM

In a bid to strengthen credit flow to small and marginal farmers, the Reserve Bank of India (RBI) has asked banks to ensure...

In a bid to strengthen credit flow to small and marginal farmers, the Reserve Bank of India (RBI) has asked banks to ensure that direct lending to such farmers does not fall below the average of the last three years for the whole banking system.

The central bank will publish this average number at the start of every year, it said in a notification. This is in addition to the changes in priority sector lending norms that the RBI made in April this year. These changes in norms come in the wake of the Centre’s concerns over an uncertain monsoon and its impact on small and marginal farmers, the RBI said.

The RBI had widened the scope of PSL by bringing in loans to medium enterprises, social infrastructure and renewable energy under the ambit and removing the bifurcation of direct and indirect lending to agriculture.

The central bank also raised the target for direct lending to small and marginal farmers under the norms to 7% for 2015-16 and to 8% for 2016-17. In its Thursday notification, the RBI added that banks should also continue to maintain all efforts to reach the level of 13.5% direct lending to the beneficiaries who earlier constituted the direct agriculture sector.

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