REVISED PRIORITY SECTOR LENDING NORMS - BOOST TO SOCIAL INFRASTRUCTURE AND RENEWABLE ENERGY

The genesis of Priority Sector Lending can be traced out from July 1968, where in the meeting of National Credit Council it was emphasised that commercial banks should increase their involvement in the financing of priority sectors, viz., agriculture and small scale industries. The description of the priority sectors was later formalised in 1972 on the basis of the report submitted by the Informal Study Group on Statistics relating to advances to the Priority Sectors constituted by the Reserve Bank in May 1971. From time to time certain modification was done in the extant guidelines to meet the financial inclusion goals of the country. As far as present priority sector lending norms are concerned, an Internal Working Group (IWG) was set up in July 2014, to revisit the existing priority sector lending guidelines. The report of the IWG was placed in the public domain inviting comments. The recommendations of the IWG were examined in the light of the comments / suggestions received from Government of India, banks, and other stakeholders and revised guidelines are being issued. The latest guidelines of priority sector lending will be boost to economy and boon to Banks. Two new categories have been added under priority sector i.e. Social Infrastructure and Renewable Energy. The loan limits for housing loans under priority sector have been revised which will again help the economy. The study will discuss about new norms of priority sector lending.