Priority
Sector Guidelines:
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Reserve Bank of India vides its
letter no. RBI/2012-13/138 RPCD.CO.Plan. BC 13/04.09.01/2012-13 dated July 20,
2012 has revised the definitions
relating to priority sector lending which would be effective from the date of
issue of their notification ie.20.07.2012.
The
salient features of the revised definitions are as under:-
01. Categories of Priority Sector:
The
following categories of advances as mentioned below would be included in the
Priority Sector Lending.
I. Agriculture
II. Micro and Small Enterprises
III.
Educational
Loans
IV.
Housing
Loans
V. Export Credit
VI.
Others
02 Targets /Sub-targets for Priority sector
(i)
The
targets and sub-targets set under priority sector lending for domestic and
foreign banks operating in India are furnished below:
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Categories
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Domestic commercial banks /
Foreign banks with 20 and above branches
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Total Priority Sector
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40 % of Adjusted Net Bank
Credit (ANBC) or credit equivalent amount of Off-Balance Sheet Exposure,
whichever is higher
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Total
agriculture
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18 percent of ANBC or credit equivalent
amount of Off-Balance Sheet Exposure, whichever is higher.
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Of this, indirect lending in
excess of 4.5% of ANBC or credit equivalent amount of Off-Balance Sheet
Exposure, whichever is higher, will not be reckoned for computing achievement
under 18 percent target. However, all agricultural loans under the categories
'direct' and 'indirect' will be reckoned in computing achievement under the
overall priority sector target of 40 percent of ANBC or credit equivalent
amount of Off-Balance Sheet Exposure, whichever is higher.
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Micro &
Small Enterprises (MSE)
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(i)
Advances to micro and small enterprises sector will be reckoned in computing
achievement under the overall priority sector target of 40 percent of ANBC or
credit equivalent amount of Off-Balance Sheet Exposure, whichever is higher.
(ii)
40 percent of total advances to micro and small enterprises sector should go
to Micro (manufacturing) enterprises having investment in plant and machinery
up to Rs. 5 lakh and micro (service) enterprises
having investment in equipment up to Rs. 2 lakh;
(ii)
20 percent of total advances to micro and small enterprises sector should go
to Micro (manufacturing) enterprises with investment in plant and machinery
above Rs. 5 lakh and up to Rs. 25
lakh, and micro (service) enterprises with investment in equipment above Rs.
2 lakh and up to Rs. 10 lakh
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Export Credit
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Export credit is not a
separate category. Export credit to eligible activities under agriculture and
MSE will be reckoned for priority sector lending under respective
categories.
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Advances to Weaker Sections
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10 percent of ANBC or credit
equivalent amount of Off-Balance Sheet Exposure, whichever is higher.
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(ii) For foreign banks with 20
and above branches, priority sector targets and sub-targets have to be achieved
within a maximum period of five years starting from April 1, 2013 and ending on
March 31, 2018. Foreign banks with 20 and above branches will submit an action
plan latest by December 31, 2012 for achieving the targets over a specific time
frame to be approved by RBI. Any subsequent reference to these banks in the
circular will be in accordance to the approved plans.
(iii) The current year’s targets
for priority sectors and sub-targets will be computed based on Adjusted Net
Bank Credit (ANBC) or credit equivalent of Off-Balance Sheet Exposures of
preceding March 31st. The outstanding priority sector loans as on March 31st
of the current year will be reckoned for achievement of priority sector targets
and sub-targets. For the purpose of priority sector lending, ANBC* denotes the
outstanding Bank Credit in India minus bills rediscounted with RBI and other
approved Financial Institutions plus permitted non SLR investments in Held to
Maturity (HTM) category (include only non-SLR bonds/debentures) plus
investments in other categories, which are eligible to be treated as part of
priority sector lending (eg. investments in securitised assets). Deposits
placed by banks with NABARD/SIDBI/NHB, as the case may be, in lieu of
non-achievement of priority sector lending targets/sub-targets, though shown
under Schedule 8 – 'Investments' in the Balance Sheet at item I (vi) – 'Others',
will not be reckoned for ANBC computation. For the purpose of calculation of
credit equivalent of off-balance sheet exposures (excluding interbank
exposures) for computing Credit Equivalent of Off -Balance Sheet Exposures for
the priority sector targets. Banks may be guided by the master circular on
exposure norms issued by our Department of Banking Operations and Development.
* For the purpose of priority
sector only. Banks should not deduct / net any amount like provisions, accrued
interest, etc. from NBC.
It
has been observed that some banks are subtracting prudential write off at
Corporate/Head Office level while reporting Bank Credit as above. In such cases
it must be ensured that bank credit to priority sector and all other
sub-sectors so written off should also be subtracted category wise from
priority sector and sub-target achievement.
(iv) The targets for Micro
Enterprises within the Micro and Small Enterprises segment (MSE) will be
computed with reference to the outstanding credit to MSE as on proceeding March
31st.
The
criteria for classification of various advances under the above broad
categories are explained hereunder:
03
Agriculture
DIRECT
AGRICULTURE
A). Loans to
individual farmers [including Self Help Groups (SHGs) or Joint Liability Groups
(JLGs), i.e. groups of individual farmers, provided banks maintain
disaggregated data on such loans] engaged in Agriculture and Allied Activities,
viz., dairy,
fishery, animal husbandry, poultry, bee-keeping and sericulture (up to cocoon
stage).
(i) Short-term loans to farmers for raising
crops, i.e. for crop loans.
This will include
traditional/non-traditional plantations, horticulture and allied activities.
(ii) Medium & long-term loans to farmers for
agriculture and allied activities (e.g. purchase of agricultural implements and
machinery, loans for irrigation and other developmental activities undertaken
in the farm, and development loans for allied activities).
(iii)
Loans to farmers for pre-harvest and post-harvest activities, viz., spraying, weeding,
harvesting, sorting, grading and transporting of their own farm produce.
(iv) Loans to
farmers up to Rs.25 lakh against pledge/hypothecation of agricultural produce
(including warehouse receipts) for a period not exceeding 12 months, irrespective
of whether the farmers were given crop loans for raising the produce or not.
(v) Loans to small and marginal farmers for
purchase of land for agricultural purposes.
(vi) Loans to distressed farmers indebted to
non-institutional lenders.
(vii) Bank loans to
Primary Agricultural Credit Societies (PACS), Farmers’ Service Societies (FSS)
and Large-sized Adivasi Multi Purpose Societies (LAMPS) ceded to or managed/
controlled by such banks for on lending to farmers for agricultural and allied
activities.
(viii)
Loans to farmers under Kisan Credit Card Scheme.
(ix) Export credit to farmers for exporting their
own farm produce.
B). Loans to corporates
including farmers' producer companies of individual farmers, partnership firms
and co-operatives of farmers directly engaged in Agriculture and Allied
Activities, viz., dairy, fishery, animal husbandry, poultry, bee-keeping
and sericulture (up to cocoon stage) up to an aggregate limit of Rs. 2 crore per borrower for the following
purposes.
(i) Short-term loans for raising
crops, i.e. for crop loans.
This will include traditional/non-traditional plantations, horticulture and allied activities.
(ii) Medium & long-term loans for agriculture and allied activities (e.g. purchase of agricultural implements and machinery, loans for irrigation and other developmental activities undertaken in the farm, and development loans for allied activities).
This will include traditional/non-traditional plantations, horticulture and allied activities.
(ii) Medium & long-term loans for agriculture and allied activities (e.g. purchase of agricultural implements and machinery, loans for irrigation and other developmental activities undertaken in the farm, and development loans for allied activities).
(iii) Loans for pre-harvest and
post-harvest activities, viz., spraying, weeding, harvesting,
grading and sorting.
(iv) Export credit for exporting
their own farm produce.
04 INDIRECT AGRICULTURE
Loans to corporates, partnership
firms and institutions engaged in Agriculture and Allied Activities [dairy,
fishery, animal husbandry, poultry, bee-keeping and sericulture (up to cocoon
stage)] if the aggregate loan limit per borrower is more than Rs.2 crore in
respect of the following, the entire loan should be treated as indirect finance
to agriculture.
i) Short-term loans for raising crops, i.e. for
crop loans.
This will include traditional/non-traditional
plantations, horticulture and allied activities.
(ii) Medium &
long-term loans for agriculture and allied activities (e.g. purchase of
agricultural implements and machinery, loans for irrigation and other developmental
activities undertaken in the farm, and development loans for allied
activities).
(iii) Loans for
pre-harvest and post-harvest activities such as spraying, weeding, harvesting, grading and sorting.
(v) Export credit to corporates, partnership
firms and institutions for exporting their own farm produce.
(vi) Loans upto Rs.5 crore to Producer Companies
set up exclusively by only small and marginal farmers under Part IXA of
Companies Act, 1956 for agricultural and allied activities.
(vii) Bank loans to
Primary Agricultural Credit Societies (PACS), Farmers’ Service Societies (FSS)
and Large-sized Adivasi Multi Purpose Societies (LAMPS) other than those
covered under direct agricultural advance.
Other
indirect agriculture loans
(i) Loans up to Rs 1 crore per
borrower to dealers /sellers of fertilizers, pesticides, seeds, cattle feed, poultry feed, agricultural
implements and other inputs.
(ii) Loans for setting up of
Agriclinics and Agribusiness Centres.
(iii) Loans up to Rs. 5 crore to
cooperative societies of farmers for disposing of the produce of members.
(iv) Loans to Custom Service Units
managed by individuals, institutions or organisations who maintain a fleet of
tractors, bulldozers, well-boring equipment, threshers, combines, etc., and
undertake farm work for farmers on contract basis.
(v) Loans for construction and
running of storage facilities (warehouse, market yards, godowns and silos),
including cold storage units designed to store agriculture produce/products,
irrespective of their location.
If
the storage unit is a micro or small enterprise, such loans will be classified
under loans to Micro and Small Enterprises sector.
(vi) Loans to MFIs for on-lending to farmers for
agricultural and allied activities as per the conditions specified.
(vii)
Loans sanctioned to NGOs, which are SHG Promoting Institutions, for on-lending
to members of SHGs under SHG-Bank Linkage Programme for agricultural and allied
activities. The all inclusive interest charged by the NGO/SHG promoting entity
should not exceed the Base Rate of the lending bank plus eight percent per
annum.
(viii) Loans sanctioned to RRBs
for on-lending to agriculture and allied activities
05. Micro and small enterprises
The limits for investment in
plant and machinery/equipment for manufacturing / service enterprise, as
notified by Ministry of Micro Small and Medium Enterprises, vide, S.O.1642(E)
dated September 29, 2006 are as under:-
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Manufacturing
sector
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Enterprises
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Investment in plant and
machinery
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Micro Enterprises
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Do not exceed twenty five lakh
rupees
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Small Enterprises
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More than twenty five
lakh rupees but does not exceed five crore rupees
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Service
Sector
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Enterprises
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Investment in equipment
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Micro Enterprises
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Does not exceed ten lakh
rupees
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Small Enterprises
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More than ten lakh rupees but
does not exceed two crore rupees
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Bank loans to micro and small
enterprises both manufacturing and service are eligible to be classified under
priority sector as per the following:
Direct
Finance
1. Manufacturing Enterprises
Ø
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. The manufacturing enterprises are defined in terms
of investment in plant and machinery.
Ø
Loans
for food and agro processing
Loans for food and agro
processing will be classified under Micro and Small Enterprises, provided the
units satisfy investments criteria prescribed for Micro and Small Enterprises,
as provided in MSMED Act, 2006.
2. Service Enterprises
Bank loans up to Rs.2 crore per
unit to Micro and Small Enterprises engaged in providing or rendering of
services and defined in terms of investment in equipment under MSMED Act, 2006.
Ø
Export
credit to MSE units (both manufacturing and services) for exporting of
goods/services produced by them.
Ø
Khadi
and Village Industries Sector (KVI)
All loans sanctioned to units in
the KVI sector, irrespective of their size of operations, location and amount
of original investment in plant and machinery. Such loans will be eligible for
classification under the sub-target of 60 percent prescribed for micro
enterprises within the micro and small enterprises segment under priority
sector.
Indirect
Finance
(i) Loans to persons involved in
assisting the decentralised sector in the supply of inputs to and marketing of
outputs of artisans, village and cottage industries.
(ii) Loans to cooperatives of
producers in the decentralised sector viz. artisans village and cottage
industries.
(iii) Loans sanctioned by banks
to MFIs for on-lending to MSE sector as per the conditions specified in
paragraph VIII of this circular.
06. Education
Loans to individuals for
educational purposes including vocational courses upto Rs.
10 lakh for studies in India
and Rs.20 lakh for studies abroad.
10 lakh for studies in India
and Rs.20 lakh for studies abroad.
07 Housing
(i) Loans to individuals up
toRs. 25 lakh in metropolitan centres with population above ten lakh and Rs.15
lakh in other centres for purchase/construction of a dwelling unit per family
excluding loans sanctioned to bank’s own employees.
(ii) Loans for repairs to the
damaged dwelling units of families up toRs.2 lakh in rural and semi- urban
areas and up to Rs.5 lakh in urban and metropolitan areas.
(iii) Bank loans to any
governmental agency for construction of dwelling units or for slum clearance
and rehabilitation of slum dwellers subject to a ceiling of Rs.10/-- lakh per
dwelling unit.
(iv) The loans sanctioned by
banks for housing projects exclusively for the purpose of construction of houses
only to economically weaker sections and low income groups, the total cost of
which do not exceed Rs.10/-- lakh per dwelling unit. For the purpose of
identifying the economically weaker sections and low income groups, the family
income limit of Rs.1, 20,000 per annum, irrespective of the location, is
prescribed.
(v) Bank loans to Housing
Finance Companies (HFCs), approved by NHB for their refinance, for on-lending
for the purpose of purchase/construction/reconstruction of individual dwelling
units or for slum clearance and rehabilitation of slum dwellers, subject to an
aggregate loan limit of Rs.10/-- lakh per borrower, provided the all inclusive
interest rate charged to the ultimate borrower is not exceeding lowest lending
rate of the lending bank for housing loans plus two percent per annum.
(vi) The eligibility under
priority sector loans to HFCs is restricted to five percent of the individual
bank’s total priority sector lending, on an ongoing basis. The maturity of bank
loans should be co-terminus with average maturity of loans extended by
HFCs. Banks should maintain necessary borrower-wise details of the
underlying portfolio.
08. Export Credit
Export Credit extended by
foreign banks with less than 20 branches will be reckoned for priority sector
target achievement.
As
regards the domestic banks and foreign banks with 20 and above branches, export
credit is not a separate category under priority sector. Export credit will
count towards the respective categories of priority sector, i.e. Agriculture
and MSE sector.
09. Others
a). Loans, not exceeding
Rs.50,000 per borrower provided directly by banks to individuals and
their SHG/JLG, provided the borrower’s household annual income in rural areas
does not exceed Rs.60,000/- and for non-rural areas it should not exceed
Rs.1,20,000/-.
b). Loans to distressed persons
[other than farmers-already included in Direct Agriculture (VI)] not exceeding
Rs.50, 000 per borrower to prepay their debt to non-institutional lenders.
c). Loans outstanding under
loans for general purposes under General Credit Cards (GCC). If
the loans under GCC are sanctioned to Micro and Small Enterprises, such loans
should be classified under respective categories of Micro and Small
Enterprises.
d). Overdrafts, up toRs.50,000
(per account), granted against 'no-frills' / basic banking / savings accounts
provided the borrowers household annual income in rural areas does not exceed
Rs.60,000/- and for non-rural areas it should not exceed Rs.1,20,000/-.
e). Loans sanctioned to State
Sponsored Organisations for Scheduled Castes/ Scheduled Tribes for the specific
purpose of purchase and supply of inputs to and/or the marketing of the outputs
of the beneficiaries of these organisations.
f). Loans sanctioned by banks
directly to individuals for setting up off-grid solar and other off-grid
renewable energy solutions for households.
010. Weaker Sections
Priority sector loans to the
following borrowers will be considered under Weaker Sections category:-
(a) Small and marginal farmers;
(b) Artisans,
village and cottage industries where individual credit limits do not exceed
Rs.50, 000;
(c) Beneficiaries
of Swarnjayanti Gram Swarozgar Yojana (SGSY), now National Rural Livelihood
Mission (NRLM);
(d) Scheduled
Castes and Scheduled Tribes;
(e) Beneficiaries of
Differential Rate of Interest (DRI) scheme;
(f) Beneficiaries under Swarna
Jayanti Shahari Rozgar Yojana (SJSRY);
(g) Beneficiaries under the
Scheme for Rehabilitation of Manual Scavengers (SRMS);
(h) Loans to Self Help Groups;
(i) Loans to distressed farmers
indebted to non-institutional lenders;
(j) Loans to distressed persons
other than farmers not exceeding Rs.50,000 per borrower to prepay their
debt to non-institutional lenders;
(k) Loans to individual women
beneficiaries upto Rs.50,000 per borrower;
(l) Loans sanctioned under (a)
to (k) above to persons from minority communities as may be notified by
Government of India from time to time.
In States, where one of the
minority communities notified is, in fact, in majority, item (l) will cover
only the other notified minorities. These States/Union Territories are Jammu
& Kashmir, Punjab, Meghalaya, Mizoram, Nagaland and Lakshadweep.
011. Investments by banks in securitised
assets
(i) Investments by banks in
securitised assets, representing loans to various categories of priority
sector, except 'others' category, are eligible for classification under
respective categories of priority sector (direct or indirect) depending on the
underlying assets provided:
(a) The securitised assets are originated
by banks and financial institutions and are eligible to be classified as
priority sector advances prior to securitisation and fulfil the Reserve Bank of
India guidelines on securitisation.
(b) The all inclusive interest
charged to the ultimate borrower by the originating entity should not exceed
the Base Rate of the investing bank plus 8 percent per annum.
The
investments in securitised assets originated by MFIs, which comply with the
guidelines in Paragraph XI of this hand-out, are exempted from this interest
cap as there are separate caps on margin and interest rate.
(ii) Investments made by banks
in securitised assets originated by NBFCs, where the underlying assets are
loans against gold jewellery, are not eligible for priority sector status.
012. Transfer of Assets through Direct
Assignment /Outright purchases
(i) Assignments/Outright
purchases of pool of assets by banks representing loans under various
categories of priority sector, except the 'others' category, will be eligible
for classification under respective categories of priority sector (direct or
indirect) provided:
(a) The assets are originated by
banks and financial institutions and are eligible to be classified as priority
sector advances prior to the purchase and fulfill the Reserve Bank of India
guidelines on outright purchase/assignment.
(b) The eligible loan assets so
purchased should not be disposed of other than by way of repayment.
(c) The all inclusive interest
charged to the ultimate borrower by the originating entity should not exceed
the Base Rate of the purchasing bank plus 8 percent per annum.
The
assignments/Outright purchases of eligible priority sector loans from MFIs,
which comply with the guidelines in Paragraph VIII of this circular are
exempted from this interest rate cap as there are separate caps on margin and
interest rate.
(ii) When
the banks undertake outright purchase of loan assets from banks/ financial
institutions to be classified under priority sector, they must report the
nominal amount actually disbursed to end priority sector borrowers and not the
premium embedded amount paid to the sellers.
(iii) Purchase/ assignment
transactions undertaken by banks with NBFCs, where the underlying assets are
loans against gold jewellery, are not eligible for priority sector status.
01 0 Inter Bank Participation Certificates
bought by Banks
Inter Bank Participation
Certificates (IBPCs) bought by banks, on a risk sharing basis, shall be
eligible for classification under respective categories of priority sector, provided
the underlying assets are eligible to be categorized under the respective
categories of priority sector and the banks fulfill the Reserve Bank guidelines
on IBPCs.
014. Bank loans to MFIs for on-lending
a) Bank credit to MFIs
extended on, or after, April 1, 2011 for on-lending to individuals and also to
members of SHGs / JLGs will be eligible for categorisation as priority sector
advance under respective categoriesviz., agriculture, micro and small
enterprise, and 'others', as indirect finance, provided not less than 85% of
total assets of MFI (other than cash, balances with banks and financial
institutions, government securities and money market instruments) are in the
nature of “qualifying assets”. In addition, aggregate amount of loan, extended
for income generating activity, is not less than 75% of the total loans given
by MFIs.
b) A “qualifying asset” shall
mean a loan disbursed by MFI, which satisfies the following criteria:
(i) The loan is to be extended
to a borrower whose household annual income in rural areas does not exceed
Rs.60,000/- while for non-rural areas it should not exceed Rs. 1,20,000/-.
(ii) Loan does not exceed Rs.35, 000/- in the first cycle and Rs.50,000/- in the
subsequent cycles
(iii) Total indebtedness of the
borrower does not exceed Rs.50, 000/-.
(iv)Tenure of loan is not less
than 24 months when loan amount exceeds
Rs.15, 000/- with right to borrower of prepayment without penalty.
(v) The loan is without
collateral.
(vi) Loan is repayable by
weekly, fortnightly or monthly installments at the choice of the borrower.
c) Further, the banks have to
ensure that MFIs comply with the following caps on margin and interest rate as
also other ‘pricing guidelines’, to be eligible to classify these loans as
priority sector loans.
(i) Margin cap at 12% for all
MFIs. The interest cost is to be calculated on average fortnightly balances of
outstanding borrowings and interest income is to be calculated on average
fortnightly balances of outstanding loan portfolio of qualifying assets.
(ii) Interest cap on individual
loans at 26% per annum for all MFIs to be calculated on a reducing balance
basis.
(iii) Only three components are
to be included in pricing of loans viz., (a) a processing fee not exceeding 1%
of the gross loan amount, (b) the interest charge and (c) the insurance
premium.
(iv) The processing fee is not
to be included in the margin cap or the interest cap of 26%.
(v) Only the actual cost of
insurance i.e. actual cost of group insurance for life, health and livestock
for borrower and spouse can be recovered; administrative charges may be
recovered as per IRDA guidelines.
(vi) There should not be
any penalty for delayed payment.
(vii) No Security Deposit/
Margin are to be taken.
d) The banks should obtain
from MFI, at the end of each quarter, a Chartered Accountant’s Certificate
stating, inter-alia, that (i) 85% of total assets of the MFI are in the nature
of “qualifying assets’’, (ii) the aggregate amount of loan, extended for income
generation activity, is not less than 75% of the total loans given by the MFIs,
and (iii) pricing guidelines are followed.
015. Non-achievement of priority sector
targets
Domestic scheduled commercial
banks and foreign banks with branches 20 and above having shortfall in lending
to overall priority sector target/agriculture target and weaker sections target
shall be allocated amounts for contribution to the Rural Infrastructure
Development Fund (RIDF) established with NABARD or Funds with NHB/SIDBI/other
Financial Institutions, as specified by the Reserve Bank.
The foreign banks with less than
20 branches, which fail to achieve the priority sector targets are required to
contribute to funds with SIDBI or with other Financial Institutions, for such
other purpose as may be stipulated by Reserve Bank of India from time to time.
For the purpose of allocation of
RIDF tranche or any other Funds as decided by Reserve Bank from time to time,
the achievement levels of priority sector lending as on the March 31st will be
taken into account. The deposits under the various Funds will be called upon by
NABARD or such other Financial Institutions as and when required by them, after
giving one month’s notice to the
banks concerned.
The interest rates on banks’
contribution to RIDF or any other Funds, periods of deposits, etc. shall be
fixed by Reserve Bank of India from time to time and will be communicated to
the concerned banks every year by the Reserve Bank at the time of
operationalisation of funds.
The misclassifications reported
by the Reserve Bank’s Department of Banking Supervision would be adjusted/
reduced from the achievement of that year, to which the amount of
declassification/ misclassification pertains, for allocation to various funds
in subsequent years.
Non-achievement of priority
sector targets and sub-targets will be taken into account while granting
regulatory clearances/approvals for various purposes.
016. Priority Sector-Data Reporting System
The robust reporting system with
granularity and system generation of priority sector data is of utmost
importance for proper monitoring and appropriate policy making. Separate
guidelines will be issued in due course.
017. Common guidelines for priority sector
loans
Banks should comply with the
following common guidelines for all categories of advances under the priority
sector.
1. Rate of interest
The rates of interest on various
categories of priority sector loans will be as per DBOD directives issued from
time to time.
2. Service charges
No loan related and adhoc
service charges/inspection charges should be levied on priority sector loans up
to Rs. 25,000.
0 Receipt, Sanction/Rejection/Disbursement
Register
A register/ electronic record
should be maintained by the bank, wherein the date of receipt,
sanction/rejection/disbursement with reasons thereof, etc., should be recorded.
The register/electronic record should be made available to all inspecting
agencies.
4. Issue of Acknowledgement of
Loan Applications
Banks should provide
acknowledgement for loan applications received under priority sector loans.
Bank Boards should prescribe a time limit within which the bank communicates
its decision in writing to the applicants.
018. Definitions
1. On-lending: Loans sanctioned
by banks to eligible intermediaries for onward lending only for creation of priority
sector assets. The average maturity of priority sector assets thus created
should be co-terminus with maturity of the bank loan.
2. Small and Marginal
Farmers: Farmers with landholding of up to 1 hectare is considered as
Marginal Farmers. Farmers with a landholding of more than 1 hectare but less
than 2 hectares are considered as Small Farmers. For the purpose of priority
sector loans ‘small and marginal farmers’ include landless agricultural
labourers, tenant farmers, oral lessees and share-croppers, whose share of
landholding is within above limits prescribed for “Small and Marginal Farmer”.
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