What changed
Previously, only 50% of GCC credit outstanding counted as indirect agriculture finance. Now, 100% of GCC credit and overdrafts up to ₹25,000 per no-frills account in rural and semi-urban areas qualify as indirect agriculture finance under priority sector.
What it means for you
Banks can now fully leverage GCC and small overdrafts to meet priority sector lending targets for agriculture. This simplifies classification and encourages more lending to rural and semi-urban households, boosting financial inclusion. Lenders should update their internal priority sector reporting systems to reflect the 100% classification.
What you must do
- Update internal priority sector classification guidelines to treat 100% of GCC outstanding as indirect agriculture finance.
- Ensure overdrafts up to ₹25,000 against no-frills accounts in rural/semi-urban areas are classified as indirect agriculture finance.
- Communicate the change to all controlling offices and branches for immediate implementation.
- Review and adjust priority sector lending reporting to reflect the revised classification.
Who it affects
All scheduled commercial banks, Regional Rural Banks, Branches in rural and semi-urban areas, Priority sector lending compliance teams
Does this apply to overdrafts above ₹25,000?
No, only overdrafts up to ₹25,000 per account against no-frills accounts qualify for the 100% classification.
Are urban no-frills account overdrafts covered?
No, the circular specifies rural and semi-urban areas only.
When does this change take effect?
Immediately from the date of the circular, May 6, 2008.