RBI sets sub targets for priority sector lending

New Delhi, Oct 9 (KNN)  Under the revised RBI guidelines, of the total advances by banks to the micro and small enterprises, 40 per cent should go to the micro manufacturing enterprises which have investment in plant and machinery upto Rs 10 lakh and 20 per cent to those which have such investment above Rs 10 lakh, but less than Rs 25 lakh.

These guidelines have been issued following recommendations of the expert committee headed by M V Nair with regard to classification of priority sector lending and its related issues.

“It has been decided to revise certain existing guidelines in supersession of the earlier guidelines,” the RBI said in a circular.

The categories under priority sector lending are agriculture, micro and small enterprises, educational loans, housing loans and others.

Loans to the micro and small enterprises engaged in the manufacture or production of goods to any industry specified in the first schedule to the industries (Development and Regulation) Act, 1951 and the activities notified by the government from time to time are eligible for classification under priority sector.

Loans to MSEs engaged in manufacturing or production of goods under MSMED Act 2006 are eligible for classification under priority sector as direct finance to MSEs.  These include loans for food and agro processing; service enterprises; export credit to MSE units (both manufacturing and services) for exporting of goods/services produced by them; and Khadi and Village Industries Sector (KVI). 

As indirect finance, loans will be provided to persons involved in assisting the decentralised sector in the supply of inputs to and marketing of outputs to artisans, village and cottage industries; and to producers in the decentralised sector namely, artisans, village and cottage industries.