CATEGORIES AND TARGETS UNDER PRIORITY SECTOR
The categories under priority sector are as follows:
i. Agriculture
ii. Micro, Small and Medium Enterprises (MSMEs)
iii. Education
iv. Housing
v. Social Infrastructure
vi. Renewable Energy
Targets /Sub-targets for Priority sector:
RRBs will have a target of 75% of their outstanding advances for priority sector lending and sub-sector targets as indicated in the table below.
The overall Priority Sector target should be achieved across all prescribed categories viz. – Agriculture, MSME, Education, Housing, Social Infrastructure, Renewable Energy and Others. However, lending to Medium Enterprises, Social Infrastructure and Renewable Energy shall be reckoned for priority sector achievement only up to 15 % of total outstanding.
The computation of priority sector targets/sub-targets achievement will be based on the total outstanding as on the corresponding date of the preceding year.
1. Agriculture
Lending to agriculture sector will be categorized as:
(i) Farm Credit (which will include short-term crop loans and medium/long-term credit to farmers)
(ii) Agriculture Infrastructure and
(iii) Ancillary Activities.
Farm credit A. Loans to individual farmers [including Self Help Groups(SHGs) or Joint Liability Groups (JLGs), i.e. groups of individual farmers, provided banks maintain disaggregated data of such loans], directly engaged in Agriculture and Allied Activities, viz., dairy, fishery, animal husbandry, poultry, bee-keeping and sericulture. This will include:
(i) Crop loans to farmers which will include traditional/non-traditional plantations and horticulture and loans for allied activities.
(ii) Medium and long-term loans to farmers for agriculture and allied activities (e.g. purchase of agricultural implements and machinery, loans for irrigation and other developmental activities undertaken in the farm, and developmental loans for allied activities.)
(iii) Loans to farmers for pre and post-harvest activities, viz., spraying, weeding, harvesting, sorting, grading and transporting of their own farm produce.
(iv) Loans to farmers up to ₹ 50 lakh against pledge/ hypothecation of agricultural produce (including warehouse receipts) for a period not exceeding 12 months.
(v) Loans to distressed farmers indebted to non-institutional lenders.
(vi) Loans to farmers under Kisan Credit Card Scheme.
(vii) Loans to small and marginal farmers for purchase of land for agricultural purposes.
B. Loans to corporate farmers, farmers' producer organizations/companies of individual farmers, partnership firms and co-operatives of farmers directly engaged in Agriculture and Allied Activities, viz., dairy, fishery, animal husbandry, poultry, bee-keeping and sericulture up to an aggregate limit of ₹ 2 crore per borrower. This will include:
(i) Crop loans to farmers which will include traditional/non-traditional plantations and horticulture, and, loans for allied activities.
(ii) Medium and long-term loans to farmers for agriculture and allied activities (e.g. purchase of agricultural implements and machinery, loans for irrigation and other developmental activities undertaken in the farm, and developmental loans for allied activities.)
(iii) Loans to farmers for pre and post-harvest activities, viz., spraying, weeding, harvesting, sorting, grading and transporting of their own farm produce.
(iv) Loans up to ₹ 50 lakh against pledge/hypothecation of agricultural produce (including warehouse receipts) for a period not exceeding 12 months. Agriculture i) Loans forconstructionof storagefacilities(warehouses, market yards, godowns and silos) infrastructure including cold storage units/cold storage chains designed to store agriculture produce/products, irrespective of their location.
ii) Soil conservation and watershed development.
iii) Plant tissue culture and agri-biotechnology, seed production, production of bio-pesticides, biofertilizer, and vermi composting.
For the above loans, an aggregate sanctioned limit of ₹ 100 crore per borrower from the banking system, will apply.
Ancillary (i) Loans up to ₹ 5 crore to co-operative societies of farmers for disposing of the produce of activities members.
(ii) Loans for setting up of Agriclinics and Agribusiness Centres.
(iii) Loans for Food and Agro-processing up to an aggregate sanctioned limit of ₹ 100 crores per borrower from the banking system.
(iv) Loans to Custom Service Units managed by individuals, institutions or organizations who maintain a fleet of tractors, bulldozers, well-boring equipment, threshers, combines, etc., and undertake farm work for farmers on contract basis.
For the purpose of computation of achievement of the sub-target, Small and Marginal Farmers will include following:
• Farmers with landholding of up to 1 hectare are considered as Marginal Farmers. Farmers with a landholding of more than 1 hectare and up to 2 hectares are considered as Small Farmers.
• Landless agricultural labourers, tenant farmers, oral lessees and share-croppers, whose share of landholding is within the limits prescribed for small and marginal farmers.
• Loans to Self Help Groups (SHGs) or Joint Liability Groups (JLGs), i.e. groups of individual Small and Marginal farmers directly engaged in Agriculture and Allied Activities provided banks maintain disaggregated data of such items.
• Loans to farmers’ producer companies of individual farmers, and co-operatives of farmers directly engaged in Agriculture and Allied Activities, where the membership of Small and Marginal Farmers is not less than 75 % by number and whose land-holding share is also not less than 75 % of the total land-holding.
2. Micro, Small and Medium Enterprises (MSMEs)
Limits for investment in plant and machinery/equipment for manufacturing / service enterprise, as notified by ministry of Micro, Small and Medium Enterprises.
Manufacturing Enterprises
The Micro, Small and Medium Enterprises engaged in the manufacture or production of goods to any industry specified in the first schedule to the Industries (Development and Regulation) Act, 1951 and as notified by the Government from time to time. The Manufacturing Enterprises are defined in terms of investment in plant and machinery.
Service Enterprises
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. Khadi and Village Industries Sector (KVI) All loans to units in the KVI sector will be eligible for classification under the sub-target of 7.5 % prescribed for Micro Enterprise under priority sector.
Other Finance to MSMEs
(i) Loans to entities involved in assisting the decentralized sector in the supply of inputs to and marketing of outputs of artisans, village and cottage industries.
(ii) Loans to co-operatives of producers in the decentralized sector viz. artisans, village and cottage industries.
(iii) Credit outstanding under General Credit Cards (including Artisan Credit Card, Laghu Udyami Card, Swarojgar Credit Card, and Weaver’s Card etc. in existence and catering to the non-farm entrepreneurial credit needs of individuals).
To ensure that MSMEs do not remain small and medium units merely to remain eligible for priority sector status, the MSME units will continue to enjoy the priority sector lending status up to three years after they grow out of the MSME category concerned.
Overdrafts under PMJDY:
In terms of revised guidelines issued by Department of Financial Services, Ministry of Finance, dated September 24, 2018, Overdraft limit to Pradhan Mantri Jan-Dhan Yojana (PMJDY) account holder has been raised to ₹10,000/-, age limit of 18-60 years has been revised to 18-65 years and there will not be any conditions attached for overdraft up to ₹2,000/-. These overdrafts will qualify as the achievement of the target for lending to Micro Enterprises.
3. Education
Loans to individuals for educational purposes including vocational courses upto ₹ 10 lakh irrespective of the sanctioned amount will be considered as eligible for priority sector.
4. Housing
(i) Loans to individuals up to ₹ 35 lakh in metropolitan centres (with population of one million and above) and ₹25 lakh in other centres for purchase/construction of a dwelling unit per family provided the overall cost of the dwelling unit in the metropolitan centres and at other centres does not exceed ₹ 45 lakh and ₹ 30 lakh respectively.
The housing loans to banks’ own employees will be excluded.
(ii) Loans for repairs to damaged dwelling units of families up to ₹ 2 lakh.
(iii) Bank loans to any governmental agency for construction of dwelling units or for slum clearance and rehabilitation of slum dwellers subject to a ceiling of ₹ 10 lakh per dwelling unit.
(iv) The loans sanctioned by banks for housing projects exclusively for the purpose of construction of houses for
Economically Weaker Sections (EWS) and Low Income Groups (LIG), the total cost of which does not exceed ₹ 10 lakh per dwelling unit. For the purpose of identifying the economically weaker sections and low income groups, the family income limit is revised to ₹ 3 lakh per annum for EWS and ₹ 6 lakh per annum for LIG, in alignment with the income criteria specified under the Pradhan Mantri Awas Yojana.
5. Social Infrastructure
Bank loans up to a limit of ₹ 5 crore per borrower for building social infrastructure for activities namely schools, health care facilities, drinking water facilities, sanitation facilities, construction/refurbishment of household toilets and household level water improvements in Tier II to Tier VI centres.
6. Renewable Energy
Bank loans up to a limit of ₹ 15 crore to borrowers for purposes like solar based power generators, biomass-based power generators, wind mills, micro-hydel plants and for non-conventional energy based public utilities viz. street lighting systems, and remote village electrification. For individual households, the loan limit will be ₹ 10 lakh per borrower.
7. Others
-> Loans not exceeding ₹ 50,000/- per borrower provided directly by banks to individuals and their SHG/JLG, provided the individual borrower’s household annual income in rural areas does not exceed ₹ 1 lakh and for nonrural areas it does not exceed ₹ 1.6 lakh.
-> Loans to distressed persons [other than farmers already included] not exceeding ₹ 1 lakh per borrower to prepay their debt to non-institutional lenders.
-> Loans sanctioned to State Sponsored Organisations for Scheduled Castes/ Scheduled Tribes for the specific purpose of purchase and supply of inputs and/or the marketing of the outputs of the beneficiaries of these organisations.
