**Policy Summary: RBI/2017-18/135**
This circular, issued by the Reserve Bank of India (RBI) on March 1, 2018, outlines revisions to priority sector lending (PSL) guidelines for Scheduled Commercial Banks, specifically addressing targets and classifications.
Effective from Fiscal Year 2018-19, foreign banks with 20 or more branches are now subject to sub-targets for lending to small and marginal farmers and micro-enterprises. These sub-targets are set at 8% of Adjusted Net Bank Credit (ANBC) or Credit Equivalent Amount of Off-Balance Sheet Exposure (CEOBE), whichever is higher, for lending to small and marginal farmers, and 7.50% of ANBC or CEOBE, whichever is higher, for lending to micro-enterprises.
The circular also removes the previously existing loan limits of ₹5 crore and ₹10 crore per borrower for Micro, Small, and Medium Enterprises (MSMEs) engaged in services, for classification under the priority sector. Consequently, all bank loans to MSMEs involved in providing or rendering services, as defined by investment in equipment under the MSMED Act, 2006, will qualify under the priority sector without any credit ceiling.
For further information, contact Gautam Prasad Borah, Chief General Manager-in-Charge, Financial Inclusion and Development Department, Central Office, at Tel No.: 91-22-22601000, 91-22-22621011/22610948/22610943, or via email at cgmincfidd@rbi.org.in. The central office is located at 10th Floor, Central Office Building, Shahid Bhagat Singh Marg, P.Box No.10014, Mumbai 400 001.
Key Entities Referenced
Priority Sector Lending: A category of bank lending that the Reserve Bank of India (RBI) requires banks to allocate a certain percentage of their lending to.
RBI: Reserve Bank of India, the central bank of India.
Scheduled Commercial Banks: Banks in India that are listed in the Second Schedule of the Reserve Bank of India Act, 1934.
Micro, Small and Medium Enterprises Services: Enterprises engaged in providing or rendering services as defined in terms of investment in equipment under MSMED Act, 2006.
Adjusted Net Bank Credit (ANBC): A measure used in India to calculate priority sector lending targets for banks.
Credit Equivalent Amount of Off Balance Sheet Exposure (CEOBE): A measure used in India to calculate priority sector lending targets for banks.
Mumbai, Maharashtra: The city in India where the Central Office of the Financial Inclusion and Development Department of RBI is located.
MSMED Act, 2006: Micro, Small and Medium Enterprises Development Act, 2006
RBI/2017-18/135
FIDD.CO.Plan.BC.18/04.09.01/2017-18 March 01, 2018
The Chairman/ Managing Director & CEOs
All Scheduled Commercial Banks
Dear Sir/ Madam,
Priority Sector Lending – Targets and Classification
Please refer to the revised priority sector guidelines issued to banks vide
FIDD.CO.Plan.BC.54/04.09.01/2014-15 circular dated April 23, 2015. It was stipulated
therein under Para (II) (i) that the sub-targets for lending to small and marginal farmers and
micro enterprises shall be made applicable for foreign banks with 20 branches and above,
post 2018 after a review in 2017.
2. Accordingly, after undertaking a review of the priority sector lending profile of the above
banks and to create a level-playing field within banks, it has been decided that the sub-target
of 8 percent of Adjusted Net Bank Credit (ANBC) or Credit Equivalent Amount of Off-
Balance Sheet Exposure (CEOBE), whichever is higher, shall become applicable for the
foreign banks with 20 branches and above, for lending to the small and marginal farmers
from FY 2018-19. Further, the sub-target of 7.50 percent of ANBC or CEOBE, whichever is
higher, for bank lending to the Micro Enterprises shall also become applicable for the foreign
banks with 20 branches and above from FY 2018-19.
3. Additionally, in the light of feedback received from various stakeholders and in line with
the increasing importance of services sector in our economy, it has been decided to remove
the currently applicable loan limits of ₹ 5 crore and ₹ 10 crore per borrower to Micro/ Small
and Medium Enterprises (Services) respectively, for classification under priority sector.
Accordingly, all bank loans to MSMEs, engaged in providing or rendering of services as
defined in terms of investment in equipment under MSMED Act, 2006, shall qualify under
priority sector without any credit cap.
Yours faithfully,
(Gautam Prasad Borah)
Chief General Manager-in Charge
िव�ीय समावेशनऔर िवकास िवभाग,क��ीय कायार्लय, 10व� मंिज़ल,क��ीय कायार्लय िब�ल्डग,शहीद भगत �सह माग,र्पो.बा.सं.10014,मुंबई 400 001
टेलीफोन:Tel No.: +912222601000/ फैक्स: +91-22-22621011/22610948/22610943 ईमेल: cgmincfidd@rbi.org.in
Financial Inclusion and Development Department, Central Office,10th Floor, Central Office Building, Shahid Bhagat Singh Marg, P.Box No.10014, Mumbai 400 001
�हदी आसान है, इसका �योग बढ़ाइए
चेतावनी : मले �रज़व र्बक� �ारा-डाक, एसएमएस या फोन कॉल के ज�रए �कसी क� भी व्य ि�गत जानकारी जैस ेबक� के खात ेका ब्य ौरा, पासवडर् आ�द नह� मागं ी जाती ह।ै यह धन रखने या देने का �स् ताव भी नह�
करता ह।ै ऐसे �स् ताव� का �कसी भी तरीके स ेजवाब मत दीिजए।
Caution: RBI never sends mails, SMSs or makes calls asking for personal information like bank account details,
passwords, etc. It never keeps or offers funds to anyone. Please do not respond in any manner to such offers.