Priority Sector, Need Importance and classifications

Before Nationalization of Indian Banks, some sectors such as agriculture and small scale industries were Ignored/least cared by the financial institution even though these sectors were inevitable for the nations development. The meeting of National Credit Council held in July 1968 emphasized that commercial bank should increase their lending to priority sector, viz, agriculture and small scale industries

Important points

• Description of priority sector formalized in 1972 based on the report submitted by an informal study group on statistics relating to priority sector.
• In November 1974 banks were advised to raise the share of these sector in their aggregate advances to level of 33 1/3 % by march 1979 and subsequently to 40% by 1980
•  Twenty point economic programme by banks Dr.K.S.Krishnaswamy

Categories under priority sector

• Agriculture
• Micro small enterprises
• Education
• Housing
• Export credit
• Others

Targets/Sub targets for priority sector

Total priority Sector -40% of Adjusted Net Bank Credit(ANBC) or credit equivalent amount of off balance sheet exposure which ever is higher

(ANBC

Total Agriculture -18% of ANBC or credit equivalent amount of off balance sheet exposure which ever is higher, of this 4.5% is maximum indirect lending

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