Meaning of Priority Sector & Priority sector advances

Meaning of Priority Sector & Priority sector advances :
Priority sector refers to those sectors of the economy which may not get timely and adequate credit in the absence of this special dispensation. Priority sector advances are small value loans to farmers for agriculture and allied activities, micro and small enterprises, poor people for housing, students for education and other low income groups and weaker sections.
In terms of RBI Master Direction- RBI/ FIDD/ 2016-17/ 33 Master Direction FIDD.CO.Plan.1/04.09.01/2016-17 “Master Direction- Priority Sector
Lending- Targets and Classification” dated July 7, 2016 the categories under priority sector are as follows:
(i) Agriculture

(ii) Micro, Small and Medium Enterprises
(iii) Export Credit
(iv) Education
(v) Housing
(vi) Social Infrastructure
(vii) Renewable Energy
(viii) Others
The targets and sub-targets for agriculture set under priority sector lending for all scheduled commercial banks operating in India are furnished
below for Domestic scheduled commercial banks and Foreign banks with 20 branches and above:

Agriculture

18 percent of Adjusted Net Bank Credit (ANBC) or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher. Within the 18 percent target for agriculture, a target of 8 percent of ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher is prescribed for Small and Marginal Farmers. Foreign banks with 20 branches and above have to achieve the Agriculture Target within a maximum period of five years starting from April 1, 2013 and ending on March 31, 2018 as per the action plans submitted by them and approved by RBI. The sub-target for Small and Marginal farmers would be made applicable post 2018 after a review in 2017. ##

 

Additionally, domestic banks are directed to ensure that the overall lending to non-corporate farmers does not fall below the system-wide average of the last three years achievement. All efforts should be maintained to reach the level of 13.5 percent direct lending to the beneficiaries who earlier constituted the direct agriculture sector. The applicable system wide average figure for computing achievement under priority sector lending will be notified every year. For FY 2015-16, the applicable system wide average figure is 11.70 percent.