Priority Sector Lending - 2487 Words

PRIORITY SECTOR LENDING Some areas or fields in a country depending on its economic condition or government interest are prioritized and are called priority sectors i.e. industry, agriculture. These may further be sub divided. Banks are directed by the state bank of the country that loans must be given on reduced interest rates with discounts to promote these fields. Such lending is called priority sector lending. The different segments of the priority sector are as follows: 1. Agriculture 2. Small Scale Industries 3. Small Road and Water Transport Operators 4. Retail Trade 5. Small Business 6. Professional and Self-employed persons 7. Education 8. Housing Finance Priority Sector Lending BY RBI The†¦show more content†¦Professional and self-employed persons (borrowing limit not exceeding Rs.10 lakh of which not more than Rs.2 lakh for working capital; in the case of qualified medical practitioners setting up practice in rural areas, the limits are Rs 15 lakh and Rs 3 lakh respectively and purchase of one motor vehicle within these limits can be included under priority sector) 7. State sponsored organizations for Scheduled Castes/Scheduled Tribes 8. Education (educational loans granted to individuals by banks) 9. Housing [both direct and indirect – loans upto Rs.5 lakhs (direct loans upto Rs 10 lakh in urban/ metropolitan areas), Loans upto Rs 1 lakh and Rs 2 lakh for repairing of houses in rural/ semi-urban and urban areas respectively]. 10. Consumption loans (under the consumption credit scheme for weaker sections) 11. Micro-credit provided by banks either directly or through any intermediaty; Loans to self help groups(SHGs) / Non Governmental Organisations (NGOs) for onlending to SHGs 12. Loans to the software industry (having credit limit not exceeding Rs 1 crore from the banking system) 13. Loans to specified industries in the food and agro-processing sector having investment in plant and machinery up to Rs 5 crore. 14. Investment by banks in venture capital (venture capital funds/ companies registered with SEBI) 4. What constitutes ‘Direct Finance’ for Agricultural Purposes ? Ans : Direct Agricultural advances denote advancesShow MoreRelatedPriority Sector Lending28386 Words   |  114 PagesPaper on Review of Priority Sector Lending, prepared by the Internal Working Group set up in Reserve Bank under the chairmanship of Shri C. S. Murthy, Chief General Manager-in-Charge, Rural Planning and Credit Department, was placed on the RBI website on September 30, 2005 for public opinion. 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