What changed
RBI has decided to allow RRBs to sell loan assets held under priority sector categories in excess of the prescribed 60% priority sector lending target, as per paragraph 137 of the Annual Policy Statement 2008-09.
What it means for you
This gives RRBs a tool to manage priority sector compliance more flexibly. By selling excess priority sector loans, they can free up capital and reduce concentration risk, while buyers can meet their own priority sector obligations.
What you must do
- Identify priority sector loan assets exceeding the 60% target for potential sale.
- Ensure that sold loans are held by the purchasing bank for at least six months to be classified under priority sector.
- Update internal policies to facilitate sale of excess priority sector loans.
- Acknowledge receipt of this circular to the respective Regional Office of RBI.
Who it affects
Regional Rural Banks (RRBs), Scheduled commercial banks (as buyers), Priority sector lending compliance teams
Can RRBs sell any priority sector loan asset?
Only those loan assets that are in excess of the prescribed 60% priority sector lending target can be sold.
What is the minimum holding period for sold loans?
The purchasing bank must hold the bought loan assets for at least six months to classify them under priority sector.
Does this change affect priority sector targets for RRBs?
No, the 60% priority sector lending target remains unchanged; only the ability to sell excess loans is introduced.