What changed
This master circular consolidates all existing priority sector lending guidelines and clarifications issued up to June 30, 2013, into one document. It supersedes the previous master circular dated July 2, 2012, and incorporates the revised guidelines issued on July 20, 2012, based on the M V Nair Committee recommendations.
What it means for you
Banks now have a single reference document for priority sector lending targets and classification, reducing confusion from multiple circulars. The 40% target and sub-targets remain unchanged, but the classification framework has been updated to include newer categories like microfinance. Loans sanctioned under older guidelines continue to qualify until maturity or renewal.
What you must do
- Review and update internal priority sector lending policies to align with the consolidated master circular.
- Ensure all priority sector loans sanctioned after July 20, 2012, follow the revised classification guidelines.
- Maintain records to track legacy loans under old guidelines until their maturity or renewal.
- Train credit and compliance teams on the updated priority sector categories and targets.
- Submit the acknowledgment receipt as required by the circular.
Who it affects
All scheduled commercial banks (excluding Regional Rural Banks), Priority sector lending departments, Compliance and risk management teams, Credit officers handling agriculture, SME, and microfinance loans
What is the priority sector lending target for banks under this master circular?
Banks must achieve 40% of adjusted net bank credit as priority sector lending, with sub-targets for agriculture (18%) and weaker sections (10%), as per the guidelines effective from July 20, 2012.
Do loans sanctioned before July 20, 2012, still count as priority sector?
Yes, loans sanctioned under the previous guidelines will continue to be classified as priority sector until their maturity or renewal.
What categories are included under priority sector lending?
The priority sector includes agriculture, micro and small enterprises, education loans, housing loans, microfinance, and loans to weaker sections, as detailed in the master circular.