Priority Sectors are those sectors in the economy which may not get timely and adequate credit in the absence of this special
dispensation. One of the reasons of this is that many people in weaker sections wanting of loans do not have assets to keep as security
against credits. But each person has the right to get all the benefits in the economy.
Our government and Central Bank Reserve Bank of India (RBI) also keep an effort to help the weaker sections. Several priority sectors
are recognized by RBI, and certain targets are given to banks according to which banks must provide loans in priority to these sectors.
As notified by RBI, categories under priority sector are
1. Agriculture
2. Micro and Small Enterprises
3. Education
4. Housing
5. Export Credit
6. Others
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. After this, it was agreed that banks should aim at raising the proportion of their advances to priority
sector to 40 percent.
The targets and sub-targets under priority sector lending are linked to Adjusted Net Bank Credit (ANBC).
The targets and sub-targets set under priority sector lending for domestic and foreign banks operating in India are furnished below:

Categories	Domestic commercial banks / Foreign banks with 20 and above branches (As percent of ANBC or Credit Equivalent of Off-Balance Sheet Exposure, whichever is higher)	Foreign banks with less than 20 branches (As percent of ANBC or Credit Equivalent of Off-Balance Sheet Exposure, whichever is higher)
Total Priority Sector	40	32
Total agriculture	18	No specific target
Advances to Weaker Sections	10	No specific target

Description of the Categories under priority sector:

Agriculture

• 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.

• Loans to corporates, partnership firms and institutions engaged in Agriculture and Allied Activities (dairy, fishery, animal

husbandry, poultry, bee-keeping and sericulture).
Micro and small enterprises
The limits for investments as notified by Ministry of Micro Small and Medium Enterprise are:

Manufacturing sector

Enterprises	Investment in plant and machinery
Micro Enterprises	Do not exceed twenty five lakh rupees
Small Enterprises	More than twenty five lakh rupees but does not exceed five crore rupees

service sector

Enterprises	Investment in equipment
Micro Enterprises	Does not exceed ten lakh rupees
Small Enterprises	More than ten lakh rupees but does not exceed two crore rupees

The sector includes loans for Food and Agro Processing, Khadi and Village Industries Sector (KVI).
Education
Loans to individuals for educational purposes including vocational courses uptoRs 10 lakh for studies in Indiaand Rs 20 lakh for
studies abroad.
Housing

• Loans to individuals up to Rs 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.
• 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.
Export Credit
Export Credit extended by foreign banks with less than 20 branches will be reckoned for priority sector target achievement.
Other

• Loans, not exceeding Rs 50,000 per borrower provided directly by banksto individuals, 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.

• Loans to distressed persons.
• Overdrafts, up to Rs 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.
Under Weaker Sections under priority sector:

• Small and marginal farmers.
• Loans to distressed persons other than farmers and to individual beneficiaries not exceeding Rs 50,000 per borrower.
• Loans to Self Help Groups.
• Beneficiaries of Swarnjayanti Gram Swarozgar Yojana (SGSY), now National Rural Livelihood Mission (NRLM).
• Scheduled Castes and Scheduled Tribes.
• Beneficiaries of Differential Rate of Interest (DRI) scheme.
• Beneficiaries under Swarna Jayanti Shahari Rozgar Yojana (SJSRY).

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