What changed
Previously, only loans to State Electricity Boards (SEBs) for reimbursing low-tension connection costs to farmers qualified as indirect agriculture finance. Now, loans to power distribution corporations/companies created from SEB bifurcation or restructuring also qualify under the same conditions.
What it means for you
Banks can now extend priority sector lending benefits to loans given to restructured power distribution entities, not just SEBs. This expands the scope of indirect agricultural finance, helping banks meet priority sector targets while supporting power sector reforms.
What you must do
- Update internal priority sector lending guidelines to include loans to power distribution corporations from SEB restructuring.
- Train branch and credit officers on the new eligibility criteria for indirect agricultural finance.
- Ensure loan documentation clearly links disbursements to farmer well energisation costs as per existing conditions.
- Monitor state-level power sector reforms to identify eligible distribution entities.
Who it affects
All scheduled commercial banks, Priority sector lending departments, Agricultural finance teams, Power distribution corporations/companies
What specific loans to power distribution companies qualify as indirect agricultural finance?
Only loans for reimbursing expenditure already incurred by the distribution company for providing low-tension connections from step-down points to individual farmers for energising their wells, same as the condition for SEBs.
Does this circular apply to all power distribution companies or only those from SEB restructuring?
It applies only to power distribution corporations/companies that emerge from the bifurcation or restructuring of State Electricity Boards.