What changed
RBI issued a Master Circular consolidating all existing guidelines, instructions, and directives on priority sector lending up to June 30, 2012. This replaced earlier circulars and clarifications, providing a single reference document for banks.
What it means for you
Banks now have a unified set of rules for priority sector lending, reducing confusion from multiple circulars. The circular reaffirms the 40% target of aggregate advances for priority sectors, with sub-targets for agriculture and weaker sections, and includes MFI lending under certain conditions.
What you must do
- Review and implement the consolidated priority sector lending guidelines from this Master Circular.
- Ensure compliance with the 40% target and sub-targets for agriculture and weaker sections.
- Update internal policies and training materials to reflect the consolidated instructions.
- Monitor lending to MFIs to ensure they meet stipulated criteria for priority sector classification.
Who it affects
All scheduled commercial banks (excluding Regional Rural Banks), Priority sector lending departments, Compliance and risk management teams
What is the main target for priority sector lending under this circular?
The circular maintains the target of 40% of aggregate bank advances for priority sectors, with sub-targets for agriculture and weaker sections, as per earlier guidelines.
Does this circular change the definition of priority sectors?
No, it consolidates existing definitions, including agriculture, tiny and small enterprises, and MFI loans meeting specific criteria, without introducing new categories.
Are Regional Rural Banks covered by this circular?
No, the circular explicitly excludes Regional Rural Banks from its scope.