Mumbai, July 17 (KNN) The Reserve Bank has directed the banks to ensure that their overall direct lending to farmers should not fall below the average of last three years, as government has expressed concerns over impact of recent adverse weather conditions. 

RBI said government has expressed concerns over adverse impact of any reduction in direct credit to individual farmers given the recent weather related difficulties faced by the agricultural sector. 

"Banks are, therefore, directed to ensure that their overall direct lending to non-corporate farmers does not fall below the system-wide average of the last three years achievement (to be notified shortly, and henceforth at the beginning of each year), failing which they will attract the usual penalties for shortfall," RBI said in a notification. 

They should also continue to maintain all efforts to reach the level of 13.5 percent direct lending to the beneficiaries who earlier constituted the direct agriculture sector, said the apex bank.
 
The target for direct lending by banks to agriculture under Priority Sector Norms has aimed to increase the flow of credit directly to farmers. Direct lending to the most disadvantaged farmers, the small and marginal farmers, has been around 6 percent of Adjusted Net Bank Credit (or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher).
 
“In an effort to increase direct lending to agriculture, the target for direct lending to small and marginal farmers under the recently revised Priority Sector Norms has been increased to 7 percent for 2015-16 and to 8 percent for 2016-17,” said RBI.
 
Furthermore, a variety of corporate loans have been precluded from getting direct lending status. This should ensure that overall direct lending to agriculture, including medium and large farmers, will increase, the central bank added. (KNN Bureau)