What changed
RBI issued a Master Circular consolidating all existing priority sector lending guidelines up to June 30, 2010. The circular formalized the broad categories of priority sector as agriculture (direct and indirect finance), micro and small enterprises (direct and indirect finance), micro credit, educational loans, and housing loans, based on recommendations from the Internal Working Group (Chairman: Shri C. S. Murthy) in 2005.
What it means for you
Banks now have a single reference document for priority sector lending compliance, reducing confusion from multiple circulars. The circular reaffirms the 40% target for priority sector advances and sub-targets for agriculture and weaker sections, requiring banks to align their lending strategies accordingly.
What you must do
- Review and update internal priority sector lending policies to align with the consolidated Master Circular.
- Ensure all priority sector advances are classified correctly under the defined categories (agriculture, micro and small enterprises, micro credit, educational loans, housing loans).
- Monitor compliance with the 40% aggregate target and sub-targets for agriculture and weaker sections.
- Train credit officers on the updated priority sector classification and reporting requirements.
Who it affects
All scheduled commercial banks (excluding Regional Rural Banks), Priority sector lending departments, Credit risk and compliance teams
What are the broad categories of priority sector under this circular?
The circular specifies agriculture (direct and indirect finance), micro and small enterprises (direct and indirect finance), micro credit, educational loans, and housing loans as the main categories.