Changes in Priority Sector Guidelines

Last updated by Jai on March 3, 2018

RBI, vide notification dated March 01, 2018 amended the priority sector guidelines. Following are the changes made in priority sector lending:

1.  Earlier it was stipulated that the sub-targets for lending to small and marginal farmers and micro enterprises shall be made applicable for foreign banks with 20 branches and above, post 2018 after a review in 2017.

Accordingly, after undertaking a review of the priority sector lending profile of the above banks and to create a level-playing field within banks, it has been decided that the sub-target of 8 percent of Adjusted Net Bank Credit (ANBC) or Credit Equivalent Amount of Off-Balance Sheet Exposure (CEOBE), whichever is higher, shall become applicable for the foreign banks with 20 branches and above, for lending to the small and marginal farmers from FY 2018-19. Further, the sub-target of 7.50 percent of ANBC or CEOBE, whichever is higher, for bank lending to the Micro Enterprises shall also become applicable for the foreign banks with 20 branches and above from FY 2018-19.

Read: Comprehensive guide to Credit Appraisal Process in Banks

2. RBI removed the currently applicable loan limits of ₹ 5 crore and ₹ 10 crore per borrower to Micro/ Small and Medium Enterprises (Services) respectively, for classification under priority sector.

Accordingly, all bank loans to MSMEs, engaged in providing or rendering of services as defined in terms of investment in equipment under MSMED Act, 2006, shall qualify under priority sector without any credit cap.