A very brief introduction to Priority Sector: –
At a meeting of the National Credit Council held in July 1968, it was emphasised that commercial banks should increase their involvement in the financing of priority sectors, viz., agriculture and small scale industries.
The description of the priority sectors was later formalised in 1972 on the basis of the report submitted by the Informal Study Group on Statistics relating to advances to the Priority Sectors constituted by the Reserve Bank in May 1971.
On the basis of this report, the Reserve Bank prescribed a modified return for reporting priority sector advances and certain guidelines were issued in this connection indicating the scope of the items to be included under the various categories of priority sector.
Although initially there was no specific target fixed in respect of priority sector lending, in November 1974 the banks were advised to raise the share of these sectors in their aggregate advances to the level of 33 1/3 percent by March 1979.
Over the years, the Reporting system has been refined to ease the reporting process by the Banks and analysis by RBI.
RBI,RPCD vide Notification No.RBI/2013-14/156 RPCD.CO.Plan. BC 15/04.09.01/2013-14 dt.
July 24, 2013, has clarified the meaning of ‘Disbursement’, for Priority Sector advances.
Accordingly, Disbursement to be reported in the monthly and yearly reporting formats is defined as under:
(i) Cash credit/over draft account and running accounts of similar nature: Debit summation minus interest and other charges or sanctioned limit, whichever is lower for the particular period under consideration (monthly/quarterly/half yearly/yearly).
(ii) Term Loans: Debit summation minus interest and other charges for the particular period under consideration (monthly/quarterly/half yearly/yearly).
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