What changed
RBI decided that outstanding deposits placed by scheduled commercial banks under RIDF and certain other funds with NABARD, due to priority sector shortfall, will be classified as indirect agriculture. These deposits as of March 31 each year will count toward overall priority sector achievement, and the preceding March 31 outstanding will form part of Adjusted Net Bank Credit.
What it means for you
Banks can now use these NABARD deposits to meet priority sector lending targets, easing pressure from shortfalls. This change effectively broadens the definition of indirect agriculture, allowing banks to leverage existing fund placements for compliance. It may reduce the need for additional priority sector lending or purchase of priority sector lending certificates.
What you must do
- Reclassify outstanding deposits under RIDF, Warehouse Infrastructure Fund, Short Term Co-operative Rural Credit Refinance Fund, and Short Term RRB Fund as indirect agriculture for priority sector reporting.
- Update internal systems to include these deposits in Adjusted Net Bank Credit calculations as of the preceding March 31.
- Ensure priority sector target achievement reports reflect this change from March 31, 2014 onwards.
- Review and amend internal policies on priority sector compliance to align with the revised master circular on ANBC computation.
Who it affects
All scheduled commercial banks (excluding Regional Rural Banks), Priority sector lending compliance teams, Risk and treasury departments managing NABARD fund placements
Which specific funds with NABARD are covered under this circular?
The circular covers outstanding deposits under Rural Infrastructure Development Fund (RIDF), Warehouse Infrastructure Fund, Short Term Co-operative Rural Credit Refinance Fund, and Short Term RRB Fund.
From which date are these guidelines effective?
These guidelines are applicable with effect from March 31, 2014.
How does this affect Adjusted Net Bank Credit (ANBC) computation?
The outstanding deposits under these funds as of the preceding March 31 will form part of ANBC, as per the amendment to the master circular on ANBC computation.