Priority Sector Lending

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Targets and Classification 

In case of foreign Banks with 20 branches & above, it has been decided that from FY 2018-19,

a.     8% of ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure (CEOBE), whichever is higher, is to be lent to the small and marginal farmers.

b.     7.50% of ANBC or CEOBE, whichever is higher, is to be lent to the Micro Enterprises.

It has also been decided to remove the currently applicable loan limits of ₹ 5 crore to Micro Ent ( Services) and ₹ 10 crore to Small and Medium Enterprises (Services), for classification under priority sector.

Henceforth, all bank loans to MSMEs, engaged in providing or rendering of services as per MSMED Act, 2006, shall qualify under priority sector without any credit cap.

Based on RBI notification dated 1^st March 2018. For any further clarification, please visit www.rbi.org.in    ................. Poppy

Relief for MSME Borrowers registered under GST

Presently, a loan account is classified as Non-Performing Asset (NPA) based on the 90 day and 120 day delinquency norms, respectively.

It was represented to RBI that formalisation of business through registration under GST had adversely impacted the cash flows of the smaller entities during the transition phase with consequent difficulties in meeting their repayment obligations.

It has now been decided that the exposure to a MSME borrower shall continue to be classified as a standard asset subject to the following conditions:

i.            The borrower is registered under the GST regime as on January 31, 2018.

ii.            The aggregate exposure, does not exceed ₹ 250 million as on January 31, 2018.

iii.            The borrower’s account was standard as on August 31, 2017.

iv.            The amount overdue as on September 1, 2017 and payments due between September 1, 2017 and January 31, 2018 are paid not later than 180 days from their respective original due dates.

v.            A provision of 5% shall be made against the exposures not classified as NPA in terms of this circular. The provision may be reversed as and when no amount is overdue beyond the 90/120 day norm, as the case may be.

vi.            The additional time is being provided for the purpose of asset classification only and not for income recognition. If the interest from the borrower is overdue beyond 90/120 days, the same shall not be recognised on accrual basis.

Based on RBI circular dated 7^th Feb 2018. For any further clarification please refer www.rbi.org.in

Revised Kisan Credit Card (KCC) Scheme

Besides the mandatory crop insurance the KCC holder should have the option to take benefit of any type of asset insurance accident insurance including PAIS, and health insurance ( wherever product is available) and have premium paid through his KCC account. Premium has to be bourne by the farmer/ Bank according to the terms of the scheme. Farmer beneficiaries must be made aware of the insurance cover available and their consent (except in case of crop insurance where it is mandatory)is to be obtained at the application stage itself.

Based on RBI master circular dated 13/10/16. For any further clarification, please refer www.rbi.org.in

‘Doubling Farmers’ Income by 2022’ - Measures

Government of India in the Union Budget 2016-17 had announced its resolve to double the income of farmers by 2022.

The strategy to achieve this goal, inter-alia, include,

-        Focus on large budget irrigation

-        Provision of quality seeds and nutrients

-        Investments in warehousing and cold storage chains

-        Promoting food processing

-        Creation of a national farm market, removing distortions and develop infrastructure such as e-platform across 585 stations

-        Strengthening of crop insurance scheme

-        Promotion of ancillary activities like poultry, bee-keeping and fisheries.

Bank should simplify their documentation for crop loans and ensure speedy sanctioning and disbursal.

The Lead Bank Scheme should be leveraged for doubling farmer’s income by 2022. Lead banks are accordingly advised to ensure the following:

a)    Work closely with NABARD in preparation of Potential Linked Plans & Annual Credit Plans.

b)    Include ‘Doubling of Farmer’s Income by 2022’ as a regular agenda in SLBC, DCC, DLRC and BLBC.

c)    Use the benchmarks as provided by NABARD.

d)    Map the overall strategy to the agriculture/agro-ancillary lending plan of your bank.

Based on RBI circular dated 29/09/2016. For any further clarification please refer www.rbi.org.in

Credit Facilities to Minority Communities

The following communities have been notified as minority communities:

(a)     Sikhs

(b)    Muslims

(c)     Christians

(d)    Zoroastrians

(e)     Buddhists

(f)      Jains

With a view to monitor Bank’s lending to this community, data on credit assistance provided should be furnished to RBI, Ministry of Finance and Ministry of Minority Affairs, every half year ie. In Sep & March. 

The Lead Banks should furnish the relevant extracts of the agenda notes and the minutes of the meetings of the DCCs and SLBCs to the Union Ministry of Finance and Minority Affairs on a quarterly basis.

Based on RBI notification dated 29/09/2016. For any further clarification, please refer www.rbi.org.in