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RBI revises Priority Sector target and classification

RBI revises Priority Sector target and classification


Update : 06.06.2018:  RBI on Wednesday (06.06.2018) revised the housing loan limits for priority sector lending from existing limit of Rs.28 lakhs to Rs.35 lakhs in Metropolitan Centres provided the overall cost of dwelling unit does not Rs.45 lakhs. The limit for other centres for classification of priority sector lending is increased from existing limit of Rs.20 lakhs to Rs.25 lakhs provided the overall cost of dwelling unit does not Rs.30 lakhs.
Earlier, RBI vide its circular RBI/2017-18/135/FIDD.CO.Plan.BC.18/04.09.01/2017-18 dated March 1, 2018 announced the following
1. The sub-target of 8 percent of Adjusted Net Bank Credit (ANBC) or Credit Equivalent Amount of Off-Balance Sheet Exposure (CEOBE), whichever is higher, shall become applicable for the foreign banks with 20 branches and above, for lending to the small and marginal farmers from FY 2018-19.
2. The sub-target of 7.50 percent of ANBC or CEOBE, whichever is higher, shall become applicable for the foreign banks with 20 branches and above, for lending to the Micro Enterprises.
3. The currently applicable loan limits of ₹ 5 crores and ₹ 10 crores per borrower to Micro/ Small and Medium Enterprises (Services) respectively, for classification under priority sector, is now removed. Consequently, all bank loans to MSMEs, engaged in providing or rendering of services as defined in terms of investment in equipment under MSMED Act, 2006, shall qualify under priority sector without any credit cap.
 

(2) Comments

    1. Surendra NaikSurendra Naik - Post author

      The Central Cabinet has recently approved a draft which proposes to change the definition of MSMEs.The changes in definition requires amendment in the MSMED Act passed through the Parliament. The highlights of the proposal are: 1. The criterion for classification of MSME will be on the basis of annual sales turnover instead of existing investment criterion. 2. There is no distinction between manufacturing and service unit. 3. The proposed turnover thresholds are: a) Micro- up to Rs 5 crore (Rs 50 mn) b) Small- up to Rs 75 crore (Rs 750 mn) c) Medium- up to Rs 250 crore (Rs 2.5 bn).

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