RBI/FIDD/2016-17/34
Master Direction FIDD.CO.Plan.2/04.09.01/2016-17
July
7, 2016
The Chairman
All Regional Rural Banks
Dear Sir/ Madam,
MASTER
DIRECTION-REGIONAL RURAL BANKS-PRIORITY
SECTOR LENDING-TARGETS AND CLASSIFICATION
The guidelines for priority
sector lending by Regional Rural Banks were revised by the Reserve Bank of
India vide circular dated December 3, 2015. The Master Direction enclosed
incorporates the updated guidelines/ instructions/ circulars on the
subject. The list of circulars consolidated in this Master Direction is
indicated in the Appendix. The
Direction will be updated from time to time as and when fresh instructions
are issued. This Master Direction has
been placed on the RBI website at rbi.org.in.
2. The revised guidelines on
priority sector lending by Regional Rural Banks were made operational with
effect from January 1, 2016. Accordingly, the priority sector loans
sanctioned under the guidelines issued prior to this date will continue to
be classified under priority sector till repayment/ maturity/ renewal.
Yours faithfully,
(A. Udgata)
Principal Chief General Manager
Master
Direction- Reserve Bank of India (Regional Rural Banks-Priority
Sector Lending –Targets and Classification) Directions, 2016
In exercise of the powers
conferred by Sections 21 and 35 A of the Banking Regulation Act, 1949, the
Reserve Bank of India being satisfied that it is necessary and expedient in
the public interest so to do, hereby, issues the Directions hereinafter
specified.
CHAPTER
– I
PRELIMINARY
1. Short Title and Commencement
(a) These Directions shall be
called the Reserve Bank of India (Regional Rural Banks -Priority Sector
Lending – Targets and Classification) Directions, 2016.
(b) These Directions shall come
into effect on the day they are placed on the official website of the
Reserve Bank of India.
2. Applicability
The provisions of these
Directions shall apply to every Regional Rural Bank (RRB) licensed to
operate in India by the Reserve Bank of India.
3. Clarification:
All other expressions unless
defined herein shall have the same meaning as have been assigned to them
under the Banking Regulation Act or the Reserve Bank of India Act, or any
statutory modification or re-enactment thereto or as used in commercial parlance,
as the case may be.
CHAPTER
II
CATEGORIES
AND TARGETS UNDER PRIORITY SECTOR
4. 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
vii.
Others
The details of eligible
activities under the above categories are specified in Chapter III.
5. Targets /Sub-targets for
Priority sector:
RRBs will have a target of 75
per cent of their outstanding advances for priority sector lending and
sub-sector targets as indicated in table below.
Categories
|
Targets
|
Total Priority Sector
|
75 per cent of total
outstanding*
|
Agriculture
|
18 per cent of total
outstanding
|
Small and Marginal Farmers
|
8 percent of total outstanding
|
Micro Enterprises
|
7.5 per cent of total
outstanding
|
Weaker Sections
|
15 per cent of total
outstanding
|
* 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 per cent 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.
CHAPTER
III
DESCRIPTION
OF ELIGIBLE CATEGORIES UNDER PRIORITY SECTOR
6. Agriculture
The 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. A list of eligible
activities under the three sub-categories is indicated below:
6.1 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.
|
6.2. Agriculture
infrastructure
|
i) Loans for construction of
storage facilities (warehouses, market yards, godowns and silos)
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,
bio-fertilizer, and vermi composting.
For the above loans, an
aggregate sanctioned limit of ? 100 crore per borrower from the banking
system, will apply.
|
6.3.Ancillary activities
|
(i) Loans up to ? 5 crore to
co-operative societies of farmers for disposing of the produce of
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 crore 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 per cent by
number and whose land-holding share is also not less than 75 per cent of
the total land-holding.
7. Micro, Small and Medium
Enterprises (MSMEs)
7.1. The limits for investment in plant and
machinery/equipment for manufacturing / service enterprise, as notified by
Ministry of Micro, Small and Medium Enterprises, vide S.O.1642(E) dated
September 9, 2006 are as under:-
Manufacturing Sector
|
Enterprises
|
Investment in plant and
machinery
|
Micro Enterprises
|
Does not exceed twenty five
lakh rupees
|
Small Enterprises
|
More than twenty five lakh
rupees but does not exceed five crore rupees
|
Medium Enterprises
|
More than five crore rupees
but does not exceed ten crore rupees
|
Service Sector
|
Enterprises
|
Investment in equipment
|
Micro Enterprises
|
Does not exceed ten lakh
rupees
|
Small Enterprises
|
More than ten lakh rupees but
does not exceed two crore rupees
|
Medium Enterprises
|
More than two crore rupees but
does not exceed five crore rupees
|
Bank loans to Micro, Small and
Medium Enterprises, for both manufacturing and service sectors are eligible
to be classified under the priority sector as per the following norms:
7.2. 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.
7.3. Service Enterprises
Bank loans up to ? 5 crore per
unit to Micro and Small Enterprises and ?10 crore to Medium Enterprises
engaged in providing or rendering of services and defined in terms of
investment in equipment under MSMED Act, 2006.
7.4. 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 per
cent prescribed for Micro Enterprise under priority sector.
7.5. 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).
7.6. 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.
7.7 Overdrafts under PMJDY:
Overdrafts extended by banks
after April 8, 2015 upto ? 5,000/- under Pradhan Mantri Jan-DhanYojana
(PMJDY) accounts provided the borrowers household annual income does not
exceed ? 100,000/- for rural areas and ? 1,60,000/- for non-rural areas.
These overdrafts will also qualify for target of Micro Enterprises and
Weaker Section under Priority Sector Lending.
8. 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.
9. Housing
(i) Loans to individuals up to ?
20 lakh in for purchase/construction of a dwelling unit per family provided
the overall cost of the dwelling unit should not exceed ? 25 lakh. 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 and low income groups, 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 of ? 2 lakh per annum, irrespective of the location, is
prescribed.
10. 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.
11. 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.
12. Others
12.1 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 ? 100,000/- and for non-rural areas it does not exceed ? 1,60,000/-.
12.2 Loans to distressed persons [other than farmers
already included under 6.1(A) (v)] not exceeding ? 100,000/- per borrower
to prepay their debt to non-institutional lenders.
12.3 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.
13. Weaker Sections
Priority sector loans to the
following borrowers will be considered under Weaker Sections category:-
No.
|
Category
|
(i)
|
Small and Marginal Farmers
|
(ii)
|
Artisans, village and cottage
industries where individual credit limits do not exceed ? 1 lakh
|
(iii)
|
Beneficiaries under Government
Sponsored Schemes such as National Rural Livelihood Mission (NRLM),
National Urban Livelihood Mission (NULM) and Self Employment Scheme for
Rehabilitation of Manual Scavengers (SRMS)
|
(iv)
|
Scheduled Castes and Scheduled
Tribes
|
(v)
|
Beneficiaries of Differential
Rate of Interest (DRI) scheme
|
(vi)
|
Self Help Groups
|
(vii)
|
Distressed farmers indebted to
non-institutional lenders
|
(viii)
|
Distressed persons other than
farmers, with loan amount not exceeding ? 1 lakh per borrower to prepay
their debt to non-institutional lenders
|
(ix)
|
Individual women beneficiaries
up to ? 1 lakh per borrower
|
(x)
|
Persons with disabilities
|
(xi)
|
Overdrafts upto ? 5,000/-
under Pradhan Mantri Jan-DhanYojana (PMJDY) accounts, provided the
borrowers’ household annual income does not exceed ? 100,000/- for rural
areas and ? 1,60,000/- for non-rural areas
|
(xii)
|
Minority communities as may be
notified by Government of India from time to time
|
In States, where one of the
minority communities notified is, in fact, in majority, item (xii) will
cover only the other notified minorities. These States/ Union Territories
are Jammu & Kashmir, Punjab, Meghalaya, Mizoram, Nagaland and
Lakshadweep.
CHAPTER
IV
MISCELLANEOUS
14. Monitoring:
The data on priority sector
advances has to be furnished by RRBs to NABARD at quarterly and annual
intervals. The quarterly and annual reporting formats are annexed. For
the purpose of calculation of priority sector lending targets, total
outstanding will be calculated as on corresponding date of the previous
year. (i.e. for reporting PSL data for quarter ending June 2016, total
outstanding will be considered as on June 30, 2015).
15. Other Guidelines
RRBs can issue Inter Bank
Participation Certificates (IBPCs) to Scheduled Commercial Banks in respect
of their priority sector advances in excess of 75 per cent of their
outstanding advances.
16. Common guidelines for
priority sector loans
RRBs should comply with the
following common guidelines for all categories of advances under the
priority sector.
(i) Rate of interest
The rate of interest on bank
loans will be as per directives issued by our Department of Banking
Regulation from time to time.
(ii) Service charges
No loan related and adhoc
service charges/inspection charges should be levied on priority sector
loans up to ? 25,000. In case of lending to SHGs/JLGs, the loan limit shall
be applicable per member of SHG/JLG and not to the group as a whole.
(iii) Receipt,
Sanction/Rejection/Disbursement Register
A register/ electronic record
should be maintained by the bank, wherein the date of receipt,
sanction/rejection/disbursement with reasons thereof, etc., should be
recorded. The register/electronic record should be made available to all
inspecting agencies.
(iv) Issue of Acknowledgement of
Loan Applications
Banks should provide
acknowledgement for loan applications received under priority sector loans.
Bank Boards should prescribe a time limit within which the bank
communicates its decision in writing to the applicants.
17. Amendments
These directions are subject to
any further instructions that may be issued by the RBI from time to time.
Banks should ensure that loans
extended under priority sector are for approved purposes and the end use is
continuously monitored. The banks should put in place proper internal
controls and systems in this regard.
APPENDIX
LIST
OF CIRCULARS CONSOLIDATED
S.No.
|
Circular
No.
|
Date
|
Subject
|
1
|
FIDD.CO.Plan.BC.14/04.09.01/2015-16
|
December 3, 2015
|
Regional Rural Banks- Priority
Sector Lending- Targets and Classification
|
|