What changed
RBI clarified that working capital limits for agricultural and allied activities, including food and agro-based processing units, are eligible for priority sector classification regardless of export involvement. This resolves ambiguity from earlier circulars. Banks must now report such export credit separately.
What it means for you
RRBs can now confidently classify export-related agricultural loans as priority sector, boosting their priority sector lending targets. This encourages lending to exporters in agriculture without losing priority sector benefits. Separate reporting ensures better tracking of export credit to agriculture.
What you must do
- Review existing agricultural export credit portfolios to ensure correct priority sector classification.
- Set up separate reporting for 'Export credit to agriculture sector' in priority sector returns.
- Train lending staff on this clarification to avoid misclassification.
- Update internal policies to reflect that export status does not affect priority sector eligibility for agriculture loans.
Who it affects
Regional Rural Banks (RRBs), Borrowers in agricultural and allied activities, Food and agro-based processing units, Priority sector lending compliance teams
Does this circular apply to all banks or only RRBs?
This circular is specifically addressed to Regional Rural Banks (RRBs). Other bank types may have separate instructions.
What types of loans are covered under this clarification?
Working capital limits granted to borrowers engaged in agricultural and allied activities, including food and agro-based processing units, are covered.
How should we report these loans?
Export credit for agricultural and allied activities must be reported separately under the heading 'Export credit to agriculture sector'.