BAGRODIA K & CO.
RBI Eases Priority Sector Norms for Banks
The Reserve Bank of India has included loans of up to R2 crore to micro and small enterprises in the services sector under priority sector for banks.
In a notice announcing an ease in priority sector norms, the RBI said that loans of up to R2 crore to companies directly engaged in agriculture and allied operations will be included in the sub-limit of direct agriculture lending under priority sector lending norms. Earlier such loans had been categorized under indirect lending to agriculture.
Banks have to lend 40% of their loans to business classified under priority sector and also meet sub-limits for direct and indirect agriculture lending within the priority sector.
The central bank has mandated banks to lend 18% to agriculture within priority sector, of which indirect lending must be only 4.5%.
The RBI has also increased the scope of housing loans that will be included under priority sector. Bank loans to housing finance companies for on-lending to construction of homes for slum dwellers will also be under priority sector for up to R10 lakh per dwelling.
“The eligibility under priority sector loans to HFCs is restricted to 5% of the individual bank’s total priority sector lending, on an ongoing basis,” the RBI said.
Bank loans to government agency for construction or redevelopment of homes to weaker sections will be under priority sector for up to R10 lakh per dwelling against R5 lakh specified earlier.
Financial Express, New Delhi, 18-10-2012