{"id":7066,"date":"2022-01-19T11:59:44","date_gmt":"2022-01-19T06:29:44","guid":{"rendered":"https:\/\/www.goseeko.com\/blog\/?p=7066"},"modified":"2022-01-19T11:59:49","modified_gmt":"2022-01-19T06:29:49","slug":"what-is-priority-sector-lending","status":"publish","type":"post","link":"https:\/\/www.goseeko.com\/blog\/what-is-priority-sector-lending\/","title":{"rendered":"What is priority sector lending?"},"content":{"rendered":"\n

Priority sector lending refers to\u00a0 lending to those areas of the economy which are considered as backward and need specific attention of the government for the development of such areas. Accordingly, the government allocates funds in the annual budget and formulates plans and policies for the development of such areas. Thus, RBI issues guidelines for the prior sector lendings. The categories under priority sector are as follows:<\/p>\n\n\n\n

  1. Agriculture<\/li><\/ol>\n\n\n\n
    1. Micro, Small and Medium Enterprises<\/li><\/ol>\n\n\n\n
      1. Export Credit<\/li><\/ol>\n\n\n\n
        1. Education<\/li><\/ol>\n\n\n\n
          1. Housing<\/li><\/ol>\n\n\n\n
            1. Social Infrastructure<\/li><\/ol>\n\n\n\n
              1. Renewable Energy<\/li><\/ol>\n\n\n\n
                1. Others<\/li><\/ol>\n\n\n\n

                  Further, the\u00a0Reserve Bank of India<\/a>\u00a0is responsible to issue guidelines to the banks for providing a specified portion of the bank lending to few specific sectors like agriculture and allied activities, micro- and small enterprises, education, housing for the poor, and other low-income groups and weaker sections.<\/p>\n\n\n\n

                  Revised guidelines of Priority sector lending<\/strong><\/p>\n\n\n\n

                  Fresh Categories<\/strong><\/h2>\n\n\n\n

                  Bank finance to start-ups up to Rs. 50 crore, loans to farmers for installation of solar power plants for solarisation of grid connected agriculture pumps and loans for setting up Compressed BioGas plants have been included as fresh categories eligible for finance under priority sector.<\/p>\n\n\n\n

                  Farmers\u2019 Related:\u00a0<\/strong><\/h3>\n\n\n\n

                  Higher credit limit has been specified for Farmers Producers Organisations (FPOs) undertaking farming with assured marketing of their produce at a predetermined price.<\/p>\n\n\n\n

                  • Firstly, loans for these activities will be subject to an aggregate limit of Rs. 2 crore per borrowing entity.<\/li>
                  • Secondly, the targets prescribes for small and marginal farmers and weaker sections increases in a phased manner.<\/li>
                  • Further it has defined farmers with land holding of up to one hectare as marginal farmers, and farmers with a landholding of more than one hectare and up to 2 hectares as small farmers.<\/li><\/ul>\n\n\n\n

                    Boosting Credit:<\/strong>\u00a0<\/h4>\n\n\n\n

                    The credit limits for renewable energy, health infrastructure, including the projects under \u2018Ayushman Bharat\u2019, have been doubled.<\/p>\n\n\n\n

                    • Hence, bank loans up to a limit of Rs. 30 crore to borrowers for purposes like solar-based and biomass-based power generators, windmills, non-conventional energy-based public utilities, etc. For individual households, the loan limit will be Rs. 10 lakh per borrower.<\/li>
                    • Moreover, bank loans up to a limit of Rs.10 crore per borrower for building healthcare facilities including under \u2018Ayushman Bharat\u2019 in Tier II to Tier VI centres.<\/li><\/ul>\n\n\n\n
                      1. Addresses Disparity:<\/strong> <\/li><\/ol>\n\n\n\n

                        It seeks to address the issues concerning regional disparities in the flow of priority sector credit at district level which includes:<\/p>\n\n\n\n

                        • Firstly, ranking districts on the basis of per capita credit flow to the priority sector.<\/li>
                        • Secondly, building an incentive framework for districts with comparatively low flow of credit and a dis-incentive framework for districts with comparatively high flow of priority sector credit.<\/li>
                        • Finally, assignment of higher weightage to priority sector credit in \u2018identified districts\u2019 where priority sector credit flow is comparatively low.<\/li><\/ul>\n\n\n\n
                          1. Benefits:<\/strong><\/li><\/ol>\n\n\n\n

                            Further, revised PSL guidelines will enable better credit penetration to credit deficient areas; increase the lending to small and marginal farmers and weaker sections; boost credit to renewable energy, and health infrastructure.<\/p>\n","protected":false},"excerpt":{"rendered":"

                            Priority sector refers to\u00a0 lending to those areas of the economy which are considered as backward and need specific attention of the government for the development of such areas. <\/p>\n","protected":false},"author":28,"featured_media":7067,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[27],"tags":[],"class_list":["post-7066","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-commerce"],"yoast_head":"\nWhat is priority sector lending? - Goseeko blog<\/title>\n<meta name=\"description\" content=\"Priority sector lending refers to\u00a0 lending to those areas of the economy which are considered as backward and need specific attention of the government\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.goseeko.com\/blog\/what-is-priority-sector-lending\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What is priority sector lending? 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