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RBI changes priority sector lending norms

The Reserve Bank of India revised priority sector lending norms for banks by including new segments like micro, small and medium enterprise (MSME ), social infrastructure and renewable energy. The revision will be effective immediately.RBI has also set up targets of 8% and 7.5% (of a bank’s total loan book) for small and marginal farmers and micro enterprises, respectively. The central bank has, however, allowed the banks to achieve these targets in a phased manner by March 2017. The target for weaker section remains at 10%. Another change brought in is to eliminate the distinction between direct and indirect agriculture, which will mean loans to units such as food and agro processing would qualify under agriculture. Foreign banks with less than 20 branches have been given time till 2020 to achieve the overall 40% target.

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