Priority Sector Lending

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Master Circular


Priority Sector Lending

(Updated upto 30 June, 2004)

(The Master Circular is also available at RBI
Website and may be
downloaded from there)


Urban Banks Department
Central Office, Mumbai

RBI/2004/ 12
BPD(PCB)MC. No. 1 /09.09.01/2004-05 July 2, 2004 Chief Executive Officers of
All Primary (Urban) Co-operative Banks

Dear Sir,

Master Circular on
Priority Sector Lending

Please refer to our Master Circular UBD.BPD(PCB)MC.No.6/09.09.01/2003-04 dated March 3, 2004 on the captioned subject (Available on RBI website The enclosed Master Circular consolidates and updates all the instructions/guidelines on the subject upto June 30, 2004. Yours faithfully,

( S.Karuppasamy)
Chief General Manager-in-Charge
Encl: As above.

Master Circular
Priority Sector Lending

1 Lending Targets ..............1
2.Classification of Priority Sector and Weaker Section Advances ......2 3. Flow of credit to SSI Industries ............2
4. Flow of credit to Minority Communities ..........3
5. Monitoring and Evaluation of Priority Sector and Weaker Section Advances ....3 6.Reporting Requirements ..............4
7. Register for priority sector/weaker section advances......4Annexure I ................5
Annexure II ..............14
Annexure III .............. 15
Annexure IV ..............17
Annexure V ..............26
Annexure VI ..............29
Appendix .............32

Master Circular
Priority Sector Lending
The need for primary (urban) co-operative bank (PCBs) for providing credit to priority sectors had been examined by the Standing Advisory Committee for PCBs constituted by Reserve bank of India in May 1983. The recommendations of the Committee were accepted by Reserve Bank of India and accordingly the targets for lending to priority sector and weaker section by the PCBs were stipulated. 1 LENDING TARGETS

1.1 Based on the recommendations made by the Standing Advisory Committee for PCBs, the targets for lending to Priority Sector and weaker sections have been prescribed for the PCBs as given below: 1.1.1 60% of total loans and advances to priority sector and 1.1.2 Of the stipulated target for priority sector advances, at least 25% (or 15% of the total loans and advances) to weaker sections.

1.2 In order to ensure that credit is available to all segments of Small Scale Industries (SSI) sector, (classified on the basis of investment in plant and machinery), the following sub-targets should be achieved:

CategoryInvestment in plant & machinery% to total SSI advances ICottage industries, khadi & village industries, artisans and tiny industriesUpto Rs. 5 lakh40
IICottage industries, khadi & village industries, artisans and tiny industriesBetween Rs. 5 lakh and Rs. 25 lakh20 IIIOther SSI unitsBetween Rs. 25 lakh and Rs. 100 lakh40

1.3The stipulation regarding priority sector lendings is not applicable to the Salary Earners' Banks. 1.4The banks should make concerted efforts to achieve the targets and, if necessary, suitably simplify the systems and procedures keeping in view the types of beneficiaries to be financed.

2CLASSIFICATION OF PRIORITY SECTOR AND WEAKER SECTION ADVANCES 2.1The types of advances to be reckoned as priority sector advances and those of it to be considered as advances to weaker sections are indicated in Annexure I. 2.2The definition of weaker section in priority sectors broadly corresponds to the beneficiaries under the 20-Point Economic Programme aimed at improving the standard of living of the weaker sections of the society. 2.3For classifying priority sector advances under various categories, it may be noted that the banks should not...
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