Priority Sector Lending Essay - 28371 Words.

Priority Sector Lending: Is this what’s going to save the farmers? Priority sector lending aims to stimulate economic activity in the country. However, it faces certain challenges which it needs to overcome.

Current Priority Sector Lending Policies in Asia Currently, the most common form of priority sector lending in Asia is the use of lending quotas by banking regulatory authorities. India, Indonesia, Thailand, and the Philippines implement such quotas. In the case of India, 40% of all bank loans must go to priority sectors, which include agriculture.

The achievement of the set goals under priority sector lending has been pursued vigorously with banks by RBI. As a result of these efforts the public sector banks increased their advances to the priority sector Currently priority sector advances by commercial banks have crossed Rs.1,00,000 crore.

The additional priority sector lending target of 2 percent of ANBC each year from 2016-17 to 2019-20 has to be achieved by lending to sectors other than exports. The sub targets for these banks, if to be made applicable post 2020, would be decided in due course.

Priority Sector Lending: Providing of credit to the MSME sector has been made compulsory by the government under the Priority Sector Lending Scheme. The priority sector includes agriculture, small enterprises and businesses, retail trade, etc. Under this scheme.

The Reserve Bank keeps on revising and updating these targeted values for priority sector lending according to the requirements of the economy. Minimum Limits for Priority Sector Lending. The minimum limits are prescribed by RBI according to the ownership pattern of banks. For all local banks in both public and private sectors are required to.

The origin of priority sector prescriptions for banks in India can be traced to the Credit Policy for the year 1967-68, wherein it was emphasized that commercial banks should increase their.

Subsequently, on the basis of the recommendations of the Working Group on the Modalities of Implementation of Priority Sector Lending and the Twenty Point Economic Programme by Banks, all commercial banks were advised to achieve the target of priority sector lending at 40 per cent of aggregate bank advances by 1985.

The guidelines for small finance banks states that at least 75% of lending has to be towards priority sector. While 40% of the lending has to be allocated according the norms for commercial banks.

Useful notes on the concept of Priority Sector! The banks should step up the credit flow to meet the legitimate requirements of tiny and SSI. The credit requirements of the tiny industries should be given preferential treatment while providing credit to this sector.

The present paper aims at examining the patterns of priority sector lending by banks, with a view to identifying the factors which determine this lending The paper is based on an analysis of secondary data relating to priority sector lending (2006-07-2015-16) for the Public sector banks in India. The results indicate gaps in patterns of the.

Is there scope for doing better with directed credit that would be a win-win for the government, the banking sector and the economy as a whole? With 40 per cent of banks assets, or 32.4 per cent of GDP, riding on this one instrument alone, the debate about priority sector lending is not new. There is, however, a new-found urgency to make it fit.