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Mr V K A U M R U T Mr V rK VA A VA A T M T M...

Mr V K A U M R U T Mr V rK VA A VA A T M T M UN A V UN A K U A R UM R M AV U N Mr TV r K VA U R VA Reference study M material for A Tpromotion M rexercise T VA K M A U N A V 2025-26 N A U R of Executives M U AV N r K V A U AR M U M T rK V KU A R A VA N M A T Mr T V M U AV UN VA rK U AR KU M R M A U N M A TV Mr TV A r K U V A R AV UN V A M T M R A N VA r KU A V KU M AR U M A U N M A T r V K U A R V M T r V M A U N A VA N M V A T r KU V AR K U M A R U M A U N M A T r V K U A R V M A T M r V M A U N V A T A N V r KU V AR K U M A R U M A U N M A T r Baroda Academy V K U A R V M T r V M A U N A VA N M V A T K U A R BankUof M Baroda RU A N M r V K A U M R U V AT Mr A T V rK V A A For N V internal circulation only M A T M U A N V r KU V AR K U M A R U M A U N M Do Not Print A Tunless extremely rrequired. SaveTPaper, V Save Trees K U and preserve VA R M r M AV U N A V Environment.A M A T N V r KU V AR K UM A RU M A U N M A T r V K U A R V is to supplement M T A of the promotion r M aspirants. Topics V A This booklet M U N the learningAefforts V A T U incorporated R in nature and are indicative M U N Apex Academy advises the readers toVrefer Aetc. for N r K V A K U A R M U to Book of Instructions, M updated information. AT SOPs, Circulars, Master Circulars, Policy U guidelines, R V Mr A T V M r K V A A N V exam within booklet is focusingUmainly on the promotion This M A T R not be considered A N the Bank (basedV on r KU trends) and previous V Ashould K U M as an instruction A R U manual. Employees M A U N M are supposedAtoT update themselves r by reading Bank’s U and latest AR V circulars, guidelines K V other general M T A news. M r V bankingA M industry/ U N awareness related V A T U R M A U N A V r K V A KU AR M M T r V U V A M A T M rK M A U N AV U R M U N K A KU AR Mr T V r V A VA N M V AT U M R U MA K A U Mr A T V M r K V Mr V K A U M R U T Mr V rK VA A VA A T M T M UN A V UN A K U A R UM R M AV U N Mr A TV M r K VA K U A R V AGRI CREDIT T Mr V M A U N VAA Nto employment and A T VGDP. K U is a key sector A Rof Indian economy U M R U A N r Agriculture M technologies. However, V K in view of its contribution A U M R U A T any amountMofrcredit even at theTmost Agricultural credit plays a vital role in farm V reasonable ratesr Kcannot guarantee VA sector development and facilitates adoption of new V Afactors including higher productivity or adequate N income among the farmers, VAinputs, M upon many as the success depends otherT M U A N V A KU AR supporting the availability of agricultural services and remunerative markets for the products. U M R U M A U N r M The agriculturalAcredit V T policies designed K A r and implementedTin VIndia are mainly supply U R M r K driven through VA A V level credit, interest N V A and directed lendingMby way of regulatory T targeted ground M R U subvention scheme A N along with other Vpolicy A K U prescription under Priority Sector Lending guidelines. A U M have yielded commendableU These policies R A field of N r interventions M agricultural V at the level of Government and K RBI credit.THowever, agriculturalrsector still faces challenges A M results in the U formation, AR U A M T V r K such as lack of capital tenant farmers, V A V and share croppers regional disparity, dependence of farmers N A especially small and marginal farmers, Vcausing farmers’ distress M T landless labourers M U on non-institutional A sources of credit N at significantly A higher rates, V KU credit culture AandRweakening state M U A non-realization of the fair price for agricultural produce and farm loan waivers r impacting V Ufinances. R M U N M TOF PRIORITY SECTOR K r LENDING T V A K U A R V A M A r V INTRODUCTION A N V M A T TheU M U A Rin its meeting heldUonMJuly 24, 1968 emphasized N U the urgency forMcommercial V r K National Ainvolvement Credit Council V in financing the priority sector R A U N banks to increase their M Scale Industry A T Further emphasis K r the same was reflected A comprising agriculture V in the Reserve rBank K Uof India’s credit AR and Small- policy for theV (SSI). M on A T M V M A year 1967-68. N Usectors was formalised V A T U R M A in 1972 based UonNthe report submitted A V r K The description of the V A priority R Sectors constituted Uto Advances to theAPriority M by the U N M Reserve Bank Ain T1971. Although initially Informal Study Group on Statistics relating K rthere was no specific Vtarget fixed in respect U by the A R V M A T M r Kinoftheir priority sector T V M Ato the level of 33.33% U Nby March 1979. AV lending, in November 1974 the banks were advised to raise the share of these sectors aggregate A advances U R M U N A V N r K V A K U A R M U M the private sector: A T In November 1978, two objectives, focused r V towards rural credit were U given to the commercial K banks in A R V M A T M r V A U N33.33% of their total Vadvances towards N A T i. UM R A V To deploy a minimum K 1980 and draw A of U Mfor achieving the target. R U priority sectors by M A March 31, U N r M ii. To V Twithin a time-bound programme K a credit deposit ratior of at least 60% through A V their rural and semi-urbanU branches AR achieve V A M T r K V separately A a time-bound N programme. V A M A T TheU M Bank of IndiaRinU1980 implementedMthe A recommendationsUofNthe ‘Report of theAWorking V r K on the Modalities Group Reserve V Aof ImplementationKofUthe Priority SectorALending R and the 20-point M Economic U N M Programme byABanks’ T for achieving ther target of priority Tsector U V lending at 40% ofKaggregate bank A R advances byV1985 and for ensuringM that a substantial portion of the enhanced rflow of resources is V M directed to Athe weaker sections U N amongst them. A VA N M V A T r AR sectors: WhileKU Ki.UOverall target forVpriority M A R U to fix any annual M A target U N M within the overall A T target of 40% M it was not considered to rbe achieved by 1985,V banks were advisedKtoUensure that a appropriate A R minimumV of 40% of additional credit every year flowsA T M r T V M A U N A V to the priority sectors. A UMinimum target for Rlending to the agricultural In view U N V r K ii. V A K UMbankssector: A Rtoofensure M the prominent position A that Ui.e., advances M advances toAtheTpriority sector should agriculture occupied M r in the national economy, V were advised that at least K 40% of the to the A V sector should be extended to A T agriculture and allied r activities, M M agricultural U N AV be at least 16% of the total advances by 1985. N K U A R M Usectors are givenAproper U R attention M r the T underprivileged V iii. Sub-target for ‘Weaker Sections’ in agriculture sections in the r K priority and small-scale V industry: In order to ensure that by banks in credit V A M AT M A U N V K U A R U MA Mr A T V M r K V Mr V K A U M R U T Mr V rK VA A VA A T M T M UN A V UN A K U A R UM R AV M U N Mr A TV concept of ‘weakerM r K VA K Uindustries was AR V The ‘weaker sections’ allocation, the T sections’ comprising of agriculture and small-scale A sector comprisedMof: r T V M A introduced. U N V in agriculture and allied A A U R M U N A V N r K a. Small and marginal V A farmers with land K Uwhose holdings of 5 acres and A Rforlesssuch M and landless labourers; U M AT U R Mr V K A b. Persons engaged in allied activities borrowal limits activities not exceeding V Rs.10,000/- A T M r T V M A U N A Vfinancing agricultural A R therefore, banks N V r KUgrains productions, Subsequent food policies recognized V Aand the increasing K U M need for A R were directed to extend U direct finance toMagriculture operations for A increasing U N M (including alliedAactivities) T to at least 15% r of the total creditTbyVMarch 1985, 16%rbyKMarch U 1987 and AR 17% by MarchV 1989. M A M V A M FOR PRIORITY N USECTOR CLASSIFICATION V A T U R M A U N A V r K GUIDELINES V A U R M U N M I. CategoriesAunder T priority sector Mr K V A K U A R V T r V M A 1. Agriculture U N A VA N M V A T r KU3. Export CreditVAR 2. Micro, Small and Medium Enterprises K U M A R U M A U N M 4. Education A T r V K U A R V M A T M r V M A Infrastructure UN 5. Housing V A T 6. Social A N V r KU7.8. Renewable AR Energy V K UM A RU M A U N M Others A T r V K U A R V M T r V M A U N A VA N M V A T K U A R U M R U A N M r V K A U M R U V AT Mr A T V rK V A A N V M A T M U A N V r KU V AR K U M A R U M A U N M A T r V K U A R V M A T M r V M A U N V A T A N V r KU V AR K UM A RU M A U N M A T r V K U A R V M T r V M A U N A VA N M V A T K U A R U M R U A N Mr V K A U M R U V AT Mr A T V r K V A A N V M A T M U A N V r KU V AR K U M A R U M A U N M A T r V K U A R V M A T M r V M A U N V A T U R A N V r K V A K UM A RU U M A M A T M r V K V T r M A U N A VA N M r KU V AR U M A R U M A T M rK V A V N V AT U M R U MA K A U Mr A T V M r K V Mr V K A U M R U T Mr V rK VA A VA A T M T M UN A V UN A K U A R UM R M AV U N Mr A TV M r K VA K U A R V T Mr V II. M A U N Targets /Sub-targets for Priority sector A VA N A T V KU AR (i) The targets and sub-targets set under priority sector lending for all scheduled commercial banks M R U A N KU M U operating in India are furnished below: M r V A U R AT Mr V Categories Domestic scheduled commercial banks Foreign banks with less than V and foreign banks with 20 branches T 20 branches r K V A A N and above V A M A T M U U Priority Sector AR40 per cent of Adjusted A N U per cent of ANBC V r KTotal V [computation ofK UMisNet given below] A or Rcomputed in para M Bank Credit 40 A as U is higher; AR U N M A T M r ANBC Amount of V K 6 below or V Credit Equivalent A T Off- CEOBE whichever M r up to 32% can be V T M A U N Balance Sheet Exposure, whichever A V is out of which A U R higher. M N Vbe to in the form of lending to Exports U not less than 8%Mcan A N r K V A K U A R and U M Agriculture AT r of ANBC orTCredit V Not applicable any other priority K Usector A R V M 18 per cent r V M A U SheetNExposure, whichever A VisAhigher. Equivalent Amount of Off-Balance N M V A T r KU V AROut of which aKtarget UMof 10 percent# Ais RU M A U N M A T prescribed r V K U A R V M for Small and Marginal A T M r V M A 7.5 N Farmers U (SMFs). per cent of ANBCV or Credit Not applicable A T Micro Enterprises A N V r KU V AREquivalent AmountMof Off-Balance U K U A R M A U N M Advances to Weaker A T Sheet Exposure, whichever is higher r of ANBC or TCredit V Not applicable K U A R V M 12 percent# A M r V SectionsA M U N Amount ofAVOff-Balance Equivalent A T U RSheet Exposure, M whichever is higher U N A V N r K # Revised targets forV A weaker sections will K U A R M U M AT U R Mr V be implemented in a phased manner as indicated below V T rK V A A N V A M A T M U A N V r U Financial K2020-21 Year V AR8% Small and Marginal K U M Farmer Target Weaker A R 10% U Sections target M A U N M 2021-22 AT 9% r V 11% KU A R 2022-23 V 9.5% M A T r V A N V 11.5% M A T M 2023-24 U 10% A 12% N V r KU V AR K UM A RU M A U N M All domestic banks A Tand foreign banks withr more than 20 branches are directed to ensureU V system-wide K that the overall A R V The applicable lending to Non-Corporate Farmers M (NCFs) does not fall T A Non-Corporate Farmers below the r M (NCF) for FY 2024- average of the last three V M A years’ achievement. U N target for lendingAtoVthe A T 25 U will be 13.78% of ANBC R M U N or CEOBE whichever is higher. All efforts should be made by banks A V to N r K increase the Farm V A Credit) higher than the K NCFU target. A R M U M AT U R V Mr A T V M r K V A M A of Adjusted NetUBank N Credit (ANBC) AV A T Computation N V r KU Credit in IndiaV[As Bank ARprescribed in item K U M A No.VI of Form `A’ under R U I M A U N M Section 42(2) A T RBI Act, 1934] Mr of the V K U A R V with RBI andNother approved Financial T A Institutions r M II T V A Bills Rediscounted M U A V A UBank Credit (NBC)*AR N V r K Net V K UM A RU III(I-II) A U M M Outstanding Deposits T r V V A SIDBI and MUDRAMLtd in lieu of non-achievement under RIDF and A T other eligible funds with M rK IV M priority A lending targets/sub-targets NABARD, NHB, sector U N AV PSLCs UN + outstanding of K U A R M M r T V r KU V AR A VA N M V AT U M R U MA K A U Mr A T V M r K V Mr V K A U M R U T Mr V rK VA A VA A T M T M UN A V UN A K U A R UM R M AV U N Mr A TV M r K VA U KV A R V T Eligible amount for exemptions on issuance of long-term bonds for Mr V M A U N VA infrastructure and affordable housing as per circular DBOD.BP.BC. A N A T V KU AR No.25/08.12.014/2014-15 dated July 15, 2014 U M R U A U N r Advances extendedV in India against theK A VI M M deposits, qualifyingAT for exemption from incremental FCNR (B)/NRE U R MrCRR/SLR requirements, the ReserveVBank’s circulars DBOD.No.Ret.BC.36/12.01.001/ A T V as per r K V A datedM A 14, 2013 read with August U NDBOD.No.Ret.BC.93/ A V12.01.001/2013- N M 2013-14 V A T 14 U K dated January 31, R DBOD mailbox A2014, U Mclarification issuedRonU A N r M dated AugustA27, February 6, 2014 and V K UBD.BPD.(PCB).CIR.No.5/13.01.000/2013-14 A U M R U T 2013 read with M r UBD.BPD.(PCB).T Cir.No.72/ V r K V A A V dated JuneN11, 2014. 13.01.000/ 2013-14 V A M T M U RIndia A N V A K U by Government Investments A made by public sector banks in theM U Recapitalization Bonds R U VII A N r floated M Other investments V of K A U M R U A T eligible to beMtreated r as priority Tsector V (e.g. r K V A A Vin securitised notes)N VA M VIII T investments M U R and kept under A N V A r KU Value of securities Face V ARelease acquired K U MHTM category under A R U IX M A U N M read with Q.11AofTFAQ and SLF-MF-MPress the TLTRO 2.0 (Press r Release 2019-2020/2276 2019-2020/2237 dated April V 17, 2020 K U A R V A T r V dated April M A vide Press Release 27, 2020 and also U N2019-2020/2294 dated Extended Regulatory A V April 30, 2020. N M Benefits under SLF- V A T KU AR MF Scheme r Bonds/debentures inV Non-SLR categoriesK UMHTM category ARU X M A U N KXIU AR under M AT made after M r V non For UCBs: V T r V VA M T investments August 30, 2007 in permitted M A held under ‘HeldUto N A A SLR bonds U R Maturity’ (HTM) category M N UIII + IV- (V+VI+VII) A V- IX N r K ANBC V A K U A R M +VIII U M AT U R Mr V rK A + X V A T M T V M A U N A V A N V r KUthe purpose * For V AR sector of priority computationM etc. from NBC. U K only. Banks should not A R Udeduct / net anyM A like amount U N provisions, accrued interest, M Adjustments forAWeightsT in PSL Achievement r V K U A R V M A T M r V M Aregional disparitiesUinNthe flow of priorityAsector V credit at the district A Tto Udistricts on the basisAofRper capita credit U N V RU To address level, it was decided K Mto priority sector and M A for U N r rank M comparatively higher V T flow of priority sector districts with comparatively K flow r credit. With effectTfrom lower flow of A build an incentive framework V FY 2024-25, a higher credit and a dis-incentive framework for Uweight (125%) AR districts with A M r K A V to the incremental shall be assigned N priority sector creditA V M where the creditAflowT V in the identified districts UM priority is comparatively U PSL less thanM Rcredit lower (per capita A and a lower weight ~9,000), U Nflow(90%) will be assignedVhigher for r K incremental V A sector U in the identified districts where the R credit is M comparatively A U N than ~42,000). TheK list of both categories A of districts is given in U R M IB and will be validATup to FY 2026-27.MThe (per capita PSL greater r districts other than V K Annexes IA and A V A T those M r T V M Awill continue to haveU Nexisting weightageAofV100%. A Mentioned N V r KU V AR K U M A R U M A U N M DESCRIPTIONAOFT ELIGIBLE CATEGORIES r UNDER PRIORITY V SECTOR r KU A R V M A T M V M A U N V A T AGRICULTURE R sector will include UThe lending to agriculture A N V r K V A K M UActivities), A RU U M A M I. A T InfrastructureMr Farm Credit (Agriculture and Allied V K V II. Agriculture T r III. A Ancillary Activities N M U A VA N M r V AR Farmers: KUM KI. UFarm Credit Individual A R U M A T M r V A V N V AT U M R U MA K A U Mr A T V M r K V Mr V K A U M R U T Mr V rK VA A VA A T M T M UN A V UN A K U A R UM R M AV U N Mr A TV M r K VA K U A R V (JLGs) i.e. groups Loans to individual farmers [including Self T Help Groups (SHGs) r or Joint Liability Groups V M A U N A VA of individual farmers, provided banks maintain N M disaggregated A Tdata V This N of K U A R viz. dairy, fishery, such loans] U M and Proprietorship firms U bee-keeping and of farmers, directly R engaged in Agriculture A and Allied Mr V include: Activities, K animal husbandry, poultry, A U M sericulture. R U T will A i. Crop r V M loans for traditional/non-traditional T r K horticultureVandA A V loans including Nand long-term loans A plantations, Vfor agriculture andNalliedMactivities (e.g.Vpurchase T of M allied R U activities. A A KU implements M U A activities). UN ii. Medium r V Aagricultural K U R and machinery and developmental A M loans for allied M A T transporting M iii. Loans for pre and r own farm produce V post-harvest activities K U grading andAR viz. spraying, harvesting, V iv. Loans toNdistressed farmers indebted AT to non-institutional r V of their A V M lenders. A T U M R v. Loans Uunder the Kisan Credit M Afarmers Card Scheme. U Nof land for agricultural V r K V vi. ALoans against pledge/hypothecation Loans to small and U marginal for R purchase M A purposes. U N K of A U up to ₹Rs. 75 lakhAR M A T receipts) for M vii. r not exceedingT12Vmonths subject toraKlimit agricultural produce (including warehouse A V against N a period NWRs/eNWRs and up toA M T V AV ₹Rs. 50 lakh against warehouse receipts other than M R U N V A K U viii. A U M R U Loans to farmers for installation of stand-alone Solar Agriculture A NWRs/eNWRs. N M r V solarisation of gridK connected AgricultureA U M Pumps and for R U A T ix. Loans to farmers M r for installation of TsolarVpower plants on barren/fallow Pumps. r K V A A V N V A M land or in stilt T M fashion U on agriculture R of Farmers engaged land A owned by farmer. N V A KU UM in Agriculture andU Corporate Farmers, FPO/FPC of Individual Farmers, Partnership Firms A and Co- r V A Operatives R Allied Activities M U N M T per borrowingMentity: a. Loans for the following r K V A activities will be subject K to an aggregate U limit of Rs. 2 crore A R V A T r V M A i. N U Crop loans to farmers A VA and which will include loans forN M traditional/non-traditional V A T K U A Rii. Medium andUlong-term M plantations and horticulture R U allied activities. and allied A N r V and machineryUand developmental RU M loans for agriculture activities (e.g. M purchase K A AT iii. loans r allied activities). T V r K harvesting, Tgrading A of agricultural implements V M for A M V M A U Nand transporting ofAtheir Loans for pre and V own farm produce. post-harvest activities viz. spraying, A U b. A R M U N V A produce UN r K V Ureceipts) for a period R not exceedingU12Mmonths Loans up to Rs.₹75 lakh against pledge/hypothecation of agricultural K A against R M A T NWRs/eNWRs (including warehouse M rand up to Rs. 50Tlakh V against warehouse K A V A r receipts M undertaking farming other V than T with M A N NWRs/eNWRs. U up to Rs. 5 crore perA V A R marketing ofUtheir N V KU M produce at a pre-determined U A c. Loans borrowing entity to FPOs/FPCs r V Aassured R price. M U N M II. Agriculture T silos) including i) Loans for K rcold storage units/cold construction of storage A Vstorage chains designed facilities (warehouse, K market Uto store agricultureAR yards, godowns and V A M T r V irrespective ofAtheir location. Infrastructure A N produce/products, V M A T U M R U M A development.UN V A ii) Soil conservation and watershed r K iii) A V Plant tissue culture U and agri-biotechnology, R seed production,UM production of bio- U N M K A R AT iv) Loans for construction r of oil extraction/ Vprocessing units rforKproduction of bio-fuels, A pesticides, bio-fertilizer, and vermi composting. V M A T M V M A their U N storage and distribution up Compressed BioA V infrastructure Gas (CBG) plants. N along with loans to A entrepreneursT for Rabove loans, an aggregate V KU M sanction limitRofUTS. 100 Crore perMfrom A the banking UN setting ForA U r V the K M III. Ancillary AT i) Loans up toMRs.r 5 crore to co-operative A V societies of farmers Ufor purchase of theAR V system, will apply. T r K V A produceN V A M T A and M Service Uup to Rs. 50 croreMtoAStart-ups, as per definition of members. U R ii) Loans U N of Ministry of A V Commerce r K V AIndustry, Govt. of India K U that are engaged A in R M limit of Rs. 100 agriculture and allied services. M A T iii) Loans for Food rand Agro-processing V up to an K U aggregate sanctioned V M crore per borrower from the banking A Tsystem. M rwith M A iv) U Nsector shortfall. AV Outstanding deposits under RIDF and other eligible funds NABARD on account R N KU M U centres. of priority v) A Loans for setting up U R M r T V rK of Agri-clinics and Agri-business V A V A M AT M A U N V K U A R U MA Mr A T V M r K V Mr V K A U M R U T Mr V rK VA A VA A T M T M UN A V UN A K U A R UM R AV M U N Mr ATV r M K VA K U or organizationsAR V vi) Loans to Custom Service Units managed T r by individuals, institutions A bulldozers, well-boring M T V M A who maintainN V a fleet of tractors, U etc., and undertake A farm work for farmers on contract basis.VA equipment, threshers, U vii) A R combines, M U N A Service UN r K V U R Bank loans to Primary Agricultural Credit Societies (PACS), Farmers’ K A M for on- R M T Societies (FSS) and A viii) Loans sanctioned r Large-sized V Adivasi Multi-Purpose K U Societies (LAMPS) A V lending to M by banks to MFIs agriculture. A T for on-lending toMagriculture r V M A U N specified in paragraph V 21 of these Master sector A as Tper the R sanctioned byUbanks A N V KU M to registered NBFCs U(other than MFIs)MasAper conditions UN conditions Directions. ix) A r V Loans K 22 of these Master R ADirections. KU R M A T specified in paragraph M r V A V T r Asub-target, Small andMMarginal FarmersAwillT V A U N V UMthe followin