Development Banking and Priority Sector

Priority Sector Lending

Priority Sector: Those activities, which assume national importance and have been assigned priorities for development.

Poverty   Line	:	if	Rural Area	Population less than 50,000
family income	below
Rs. 11,000
Poverty   Line	:	if	Semi-urban	Population less than 1 lakhs
family income	below		Area
Rs.11,850
			Small Farmers	Farmers holding wet lands up to 2.5
				acres or dry lands up to 5 acres.
			Marginal	Wet Land 1.25 acres / 2.5 acres dry
			Farmers	land.

NABARD established on 12^th July 1982 by merging Agriculture Refinance and Development Corporation and Agricultural Credit Department of the RBI.

Weaker Section: All those living below the poverty line of rupees 11,000 in rural areas and Rs.11, 850 in Urban Areas and the semi-urban and deprived class of society like SC/ST.

Targets under Priority Sector Lending (8)

	Priority	Agri	SSI	Weaker
	Sector			Section
Commercial Banks & RRB	40	18		10
Foreign Banks(Any shortfall in the priority	32		12
sector targets should be placed with SIDBI)
Urban Co-operative Banks	60

Differential Rate of Interest

SLRS

Rural Artisans

SC/STs

Small/marginal Farmers

Land less labourers

The Priority sector has been classified as

.

Primary Sector: This constitutes agriculture and allied activities - dairy farming, poultry farming, goat rearing, pisciculture etc. Agriculture sector brings 1/3^rd income of the national income. Agriculture advances are classified as

Direct Agricultural Advances	Indirect Agricultural advances
The  advances  given  directly  to  the	The  advances  given  to  dealers  of
farmers  (Crop  Loan,  dairy  loan,	fertilizers, seeds , pesticides etc
Tractor loan)	PACS
	LAMPS
	Deposit made in RIDF
	Subscription   of   bonds   issued   by
	NABARD

Secondary Sector: Small sector Industries, Ancillary Industries, Village and Cottage Industries, tiny industries, and small scale service and business enterprises

SSI means industrial unit engaged in manufacturing, processing, preservation of goods, mining or servicing/repairing and whose original cost in Plant and Machinery does not exceed 1 Crore.

Ancillary Industry – Investment in Fixed asset not more than 3 Crores Tiny Industry – Investment in Plant and Machinery not exceeding 25 Lakhs. Village & Cottage Industry – total credit requirement does not exceed Rs. 50,000.

SSSBE – Investment in fixed asset excluding land and building of not more than Rs. 5 Lakhs.

Tertiary Sector: In this sector are small road and water supply operator, professional and self employed, retrial trade, small business, education, housing and state sponsored corporations for SC/ST.

Small Road and water transport operator

Small Business / Business Enterprises

Retail Traders

Professional and Self-employed

1	Small	Road   and	Vehicle not exceeding 10
	Water	Transport	There is no limit for loan amount
	operator		Repayment period should not exceed 5 years.
2	Small	Business/	Cost of equipment should not exceed 10 Lakhs.
	Business		Working Capital limit Rs, 5 Lakhs or less
	Enterprise		Loan may be given for acquiring / repairing business
			premises, to purchase of machinery, equipments,
			land, building, furniture etc.
			Loan  for  running  STD/ISD/PCO,  Travel  agency,

					mutton shop, fruit vendors etc.
3	Retail Traders			Retail traders dealing in non-essential commodities
					loan amount is fixed Rs. 2 Lakhs.
				There is no ceiling for retail traders dealing with
					essential commodities (Sugar, Kerosene etc.)
4	Professional	and		The borrowing max limit Rs. 5 lakhs. Out of which
	Self-employed				working capital limit Rs. 1 lakhs.
				For medical practitioners setting up practice in rural /
					Semi-urban areas the limit is Rs. 10 lakhs out of
					which working capital Rs. 2 lakhs.
5	Educational Loans			Education in India – Rs. 5 lakh – 7.5 lakhs
				Education abroad - Rs. 10 lakh – 15 lakhs.
6	Housing			Direct  advance  –  Rs.  15  lakhs,  Loans  upto  Rs.
					50,000 for repairs
				Indirect advance – Rs. 5 lakhs.
7	Consumption			General Consumption/Funerals		- 150
	Loans			Birth/Religious ceremonies		- 150
				Educational Needs		- 200
				Marriage expenses/Medical expenses		- 500
				The aggregate amount per family per year should
					not exceed Rs.1000[Rs.2000 against securities

Agriculture (9)

Direct Finance

Short Term Loans

Medium and Long Term Loans

Indirect Finance