What changed
This Master Circular updates and consolidates all priority sector lending instructions for UCBs issued up to June 30, 2012, replacing the July 1, 2011 circular. It reaffirms the broad categories defined after the 2005 Internal Working Group recommendations, focusing on agriculture, tiny and small enterprises, and weaker sections. No new targets or sub-targets were introduced; the circular primarily serves as a single reference document.
What it means for you
UCBs must continue to meet existing priority sector lending targets without any relaxation or new obligations. The circular emphasizes that only sectors impacting large populations or employment-intensive areas qualify, so banks should align their lending strategies accordingly. Compliance reporting remains critical, and any deviation could attract regulatory scrutiny.
What you must do
- Review the consolidated guidelines to ensure your bank's priority sector lending portfolio matches the updated categories.
- Maintain separate records for direct and indirect agricultural finance, ensuring loans to regular members only.
- Submit the annual return on priority sector and weaker section lending in the prescribed proforma.
- Monitor credit flow to minority concentrated districts using the state-wise list provided in the circular.
Who it affects
All Primary (Urban) Co-operative Banks (UCBs), Chief Executive Officers of UCBs, Priority sector lending departments in UCBs, Compliance and reporting teams in UCBs
Does this circular introduce new priority sector targets for UCBs?
No, it consolidates existing instructions issued up to June 30, 2012. Targets and sub-targets remain as previously stipulated.
Can UCBs lend to nominal members under direct agriculture finance?
No, direct finance to agriculture is limited to regular members only, not nominal members or agencies like PACS.
What categories are included in the priority sector for UCBs?
The broad categories are agriculture (direct and indirect), tiny and small enterprises, and weaker sections, as per the 2005 Internal Working Group recommendations.