What changed
This master circular updates and consolidates all priority sector lending instructions for UCBs issued up to June 30, 2010, replacing the July 1, 2009 circular. It reaffirms the categories (agriculture, small enterprises, education, housing, etc.) and targets set earlier, with no new policy shifts.
What it means for you
UCBs must continue to meet the 60% priority sector lending target and 15% weaker section sub-target. Loans to agriculture (direct and indirect), small enterprises, and education are eligible. Compliance reporting and board oversight remain key; non-compliance may invite regulatory scrutiny.
What you must do
- Ensure 60% of net bank credit is directed to priority sectors as defined.
- Maintain 15% of net bank credit for weaker sections (e.g., small/marginal farmers, artisans).
- Classify agriculture loans correctly: direct to members (not nominal) and indirect via specified agencies.
- Submit annual returns on priority sector and weaker section lending in prescribed proformas.
- Review board memorandum (Statement I) and update internal policies accordingly.
Who it affects
All Primary (Urban) Co-operative Banks (UCBs), Chief Executive Officers of UCBs, Priority sector lending teams at UCBs, Board of directors of UCBs
What are the priority sector lending targets for UCBs under this circular?
UCBs must lend 60% of net bank credit to priority sectors, with 15% specifically to weaker sections. Agriculture, micro/small enterprises, education, and housing loans up to certain limits qualify.
Can UCBs lend to nominal members under agriculture direct finance?
No. Direct agriculture finance is limited to regular members only, not nominal members or agencies like PACS or land development banks.
Does export credit for agriculture count as priority sector?
Yes. Loans for agriculture and allied activities, whether for export or domestic purposes, are eligible for priority sector classification.