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24/08/2013 06:32pm

28 banks fail to achieve priority sector lending

image 28 banks fail to achieve priority sector lending
Mumbai, Aug 24 (KNN) As many as 28 banks, including 16 from the public sector, have failed to achieve the 40 per cent target of overall priority sector lending which includes loans to MSMEs and agriculture, as on March 31, 2013.

 “As on March 31, 2013 domestic banks (both public and private) were below the target of priority sector lending,” according to the Reserve Bank of India.

The priority sector comprises a vast section of the population in sectors such as agriculture, micro and small enterprises (MSEs), education and housing.

As on the last reporting Friday of March 2012 and March 31, 2013, the target set for priority sector advances was 40 per cent of the Adjusted Net Bank Credit (ANBC) or credit equivalent of off-balance sheet exposure (OBE), whichever is higher, as on March 31 of the preceding year for domestic banks and 32 per cent for foreign banks.

“During this period, 16 of the 26 public sector banks, 10 of the 20 private sector banks and 2 of the 41 foreign banks could not achieve the target of overall priority sector lending,” the RBI annual report said.

According to the RBI data, as on the last reporting Friday of March 2013, public sector banks had lend Rs 12,822.12 billion which is 36.2 per cent, the private sector banks lent Rs 3,274.06 billion which is 37.5 per cent while the foreign banks lent Rs 848.54 billion which is 35.1 per cent.

The scheduled commercial banks, both domestic and foreign, that failed to achieve the priority sector targets/sub-targets will be required to deposit the shortfall to the extent of corpus of funds announced by the Government in the Rural Infrastructure Development Fund (RIDF) set up with the National Bank for Agriculture and Rural Development (NABARD) and other funds set up with the Small Industries Development Bank of India (SIDBI) and the National Housing Bank (NHB).
During the year 2013-14, RIDF XIX, with a corpus of Rs 200 billion, has been set up with NABARD. In addition, the MSME (Refinance) Fund with a corpus of Rs 100 billion with SIDBI, the Warehouse Infrastructure Fund with a corpus of Rs 50 billion, the Short Term Co-operative Rural Credit (STCRC) (Refinance) Fund with a corpus of Rs 300 billion, the Short Term RRB Credit Re-Finance Fund with a corpus of Rs 200 billion with NABARD and the Rural Housing Fund with a corpus of `60 billion with NHB, have been set up during 2013-14.
Another fund, viz., the Urban Housing Fund with a corpus of Rs 20 billion has been set up this year with NHB.
However, credit to the MSE sector by SCBs has registered a growth of 29.8 per cent in 2012-13 over the previous year.

To speed up the process of identifying a unit as sick and detecting incipient sickness and to lay down procedures for banks to adopt before declaring unit unviable, revised guidelines for the rehabilitation of sick units in the MSE sector were issued on November 1, 2012. (KNN/SD)

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