Description
The PPT explaining on Priority Sector Landing. Covers basics, classification, categories, facts etc on PSL.
Priority Sector Lending
Agenda
? Priority Sector
? Background
? Targets under Priority Sector (PS) ? Classification of PS Advances
? Categories of PS
? NABARD, SIDBI,DICGC ? Penalties
? Common Guidelines for PS Advances
Priority Sector
? Priority Sectors include ? Agriculture
?
Small Scale Industries
?
Small Business / Service Enterprises
Micro Credit
?
?
Education Loans
Housing Loans
?
Background
? 1968 – Advise by National Credit Council to
Commercial banks to finance Priority Sector. ? 1972 – Description of Priority Sector formalized based on RBI report. ? 1974 – Banks advised to lend to the level of 33.33% of Net Bank Credit (NBC) by March 1979. ? 1980 – Advise from Finance Minister to raise the proportion to 40% of NBC by March 1985.
Targets under Priority Sector
Domestic Banks (Both Private & Public sector) Total Priority Sector Advances 40% of NBC Foreign Banks operating in India 32% of NBC
Total Agricultural Advances
SSI Advances Export Credit
18% of NBC
No target Export credit does not form part of priority sector 10% of NBC
No target
10% of NBC 12% of NBC
Advances to weaker section*
No target
* 1% of previous year’s total advances under Differential Rate of Interest (DRI) Scheme (@ 4%)
Classification of Priority Sector Advances
? Direct lending ? Loans for raising crops. ? Working Capital and term loans for financing production and investment requirements. ? Loans to purchase land for agricultural purposes. ? Loans for pre and post harvesting activities. ? Loans for construction of farm building, storages, etc.
Classification of Priority Sector Advances
Contd…
? Indirect lending ? Loans to food and agro based processing units. ? Loans to NBFCs for lending to individual farmers. ? Finance for setting up Agriclinics and Agribusiness centers. ? Finance for hire purchase schemes for distribution of agriculture machinery. ? Subscription of Bonds issued by NABARD.
Categories of Priority Sector
? Agriculture (Direct and Indirect Finance)
?
Short, Medium & Long term lending. No limit to Individual farmers, Self Help Groups (SHG) & Joint Liability Groups (JLG) of individual farmers. Limit of Rs. 20 lakh to Corporate, Partnership firms and Institutions.
?
?
Categories of Priority Sector
contd…
? Small Scale Industries (Direct and Indirect)
?
Lending to SSI whose investment in equipments does not exceed Rs. 5 crore.
?
Direct finance to units engaged in manufacture, processing or preservation of goods.
Indirect finance to any person providing inputs to or marketing the outputs of artisans, village and cottage industries, and to co-operatives of SSI.
?
Categories of Priority Sector
? Small business / Service Enterprises
?
contd…
Lending to business / enterprises whose investment in equipments does not exceed Rs. 2 crore.
?
Includes finance to small business, retail trade, professional & self employed persons, small road & water transport operators.
Categories of Priority Sector
? Weaker Section
? ?
contd…
?
? ?
SMF with
The PPT explaining on Priority Sector Landing. Covers basics, classification, categories, facts etc on PSL.
Priority Sector Lending
Agenda
? Priority Sector
? Background
? Targets under Priority Sector (PS) ? Classification of PS Advances
? Categories of PS
? NABARD, SIDBI,DICGC ? Penalties
? Common Guidelines for PS Advances
Priority Sector
? Priority Sectors include ? Agriculture
?
Small Scale Industries
?
Small Business / Service Enterprises
Micro Credit
?
?
Education Loans
Housing Loans
?
Background
? 1968 – Advise by National Credit Council to
Commercial banks to finance Priority Sector. ? 1972 – Description of Priority Sector formalized based on RBI report. ? 1974 – Banks advised to lend to the level of 33.33% of Net Bank Credit (NBC) by March 1979. ? 1980 – Advise from Finance Minister to raise the proportion to 40% of NBC by March 1985.
Targets under Priority Sector
Domestic Banks (Both Private & Public sector) Total Priority Sector Advances 40% of NBC Foreign Banks operating in India 32% of NBC
Total Agricultural Advances
SSI Advances Export Credit
18% of NBC
No target Export credit does not form part of priority sector 10% of NBC
No target
10% of NBC 12% of NBC
Advances to weaker section*
No target
* 1% of previous year’s total advances under Differential Rate of Interest (DRI) Scheme (@ 4%)
Classification of Priority Sector Advances
? Direct lending ? Loans for raising crops. ? Working Capital and term loans for financing production and investment requirements. ? Loans to purchase land for agricultural purposes. ? Loans for pre and post harvesting activities. ? Loans for construction of farm building, storages, etc.
Classification of Priority Sector Advances
Contd…
? Indirect lending ? Loans to food and agro based processing units. ? Loans to NBFCs for lending to individual farmers. ? Finance for setting up Agriclinics and Agribusiness centers. ? Finance for hire purchase schemes for distribution of agriculture machinery. ? Subscription of Bonds issued by NABARD.
Categories of Priority Sector
? Agriculture (Direct and Indirect Finance)
?
Short, Medium & Long term lending. No limit to Individual farmers, Self Help Groups (SHG) & Joint Liability Groups (JLG) of individual farmers. Limit of Rs. 20 lakh to Corporate, Partnership firms and Institutions.
?
?
Categories of Priority Sector
contd…
? Small Scale Industries (Direct and Indirect)
?
Lending to SSI whose investment in equipments does not exceed Rs. 5 crore.
?
Direct finance to units engaged in manufacture, processing or preservation of goods.
Indirect finance to any person providing inputs to or marketing the outputs of artisans, village and cottage industries, and to co-operatives of SSI.
?
Categories of Priority Sector
? Small business / Service Enterprises
?
contd…
Lending to business / enterprises whose investment in equipments does not exceed Rs. 2 crore.
?
Includes finance to small business, retail trade, professional & self employed persons, small road & water transport operators.
Categories of Priority Sector
? Weaker Section
? ?
contd…
?
? ?
SMF with