This comes at a time when most lenders are struggling to meet their priority sector targets, with the premium on certificates of credit rising by around 200 basis points in the past one year. At present only RRBs or RRBs are the priority sector lending suppliers. Credit.
“We have had informal discussions with the Reserve Bank of India, and have also given representation to the government,” said a bank executive, aware of the developments, adding that there was a need to broaden the priority sector.
Currently eight sectors including agriculture, micro and small medium enterprises, export credit, housing, education, renewable energy and social infrastructure are considered eligible for priority sector credit. Loan. Commercial lenders will have to mandatorily channelize 40% of their adjusted net bank credit (ANBC) to these sectors, of which 18% is allocated for agriculture.
latest data from reserve Bank of India indicates that overall priority sector lending to scheduled commercial banks was 40.54% in 2020-21 (as of end-December 2020), albeit with a slight decrease for private sector and foreign banks.
“There are various subcategories within this structure and most of the banks are unable to meet these requirements and hence there is a need to identify new potential areas,” said the executive quoted above, adding that most of the large lenders are not eligible for Priority Sector Lending Certificates (PSLCs). resort to buying. to meet their regulatory requirements. A bank running short of meeting targets can purchase a priority sector loan certificate from a lender with a surplus for a fee.
“Today, only regional rural banks (RRBs) are the suppliers of PSLCs and most of the sponsor banks buy it from their RRBs,” he said, adding that non-banking finance companies or NBFCs also have underwriting limits.
The overall trading volume of PSLCs registered a growth of 25.9% and stood at Rs 5.89 lakh crore in 2020-21 as against 43.1% a year ago.