Page 182 - DMGT303_BANKING_AND_INSURANCE

Unit 9: Priority Sector Lending

(vii) Housing & Urban Development Corporation (HUDCO) Notes
(a) Subscription to bonds issued by HUDCO exclusively for financing of housing,
irrespective of the loan size per dwelling unit, will be eligible for inclusion
under priority sector advances as indirect housing finance.
(b) Investment in special bonds issued by HUDCO for on-lending to artisans,
handloom weavers, etc. under tiny sector will be classified as indirect lending
to SSI (Tiny) sector.

(viii) Other investments
Investments by the banks in venture capital will be eligible for inclusion in Priority
Sector lending. This is subject to the condition that the venture capital funds/
companies are registered with SEBI.
(ix) Lines of credit

Banks may consider on merit proposals received from SIDCs and SFCs for sanction
of term loan in the form of lines of credit.

(x) Bills rediscounting
Funds provided by commercial banks to SIDBI byway of rediscounting of bills of
SSIs.
(xi) Deposits in Rural Infrastructure Development Fund (RIDF)
Outstanding balances of the deposits placed by Banks in RIDF of NABARD would be
reckoned as Indirect finance to agriculture.
(xii) Leasing & Hire Purchase

Para-banking activities such as leasing and hire purchase financing undertaken
departmentally by banks will be classified as priority sector advances, provided the
ultimate beneficiary satisfies the criteria laid down by RBI for treating such advances
to PS.
11. What are the weaker sections within the priority sector?

Ans. The weaker sections under priority sector include the following:
(i) Small and marginal farmers with land holding of 5 acres and less and landless
labourers, tenant farmers and share croppers.
(ii) Artisans, village and cottage industries where individual credit limits do not exceed
Rs. 50,000/-.
(iii) Beneficiaries of Swarnjayanti Gram Swarojgar Yojana (SGSY)
(iv) Scheduled Castes and Scheduled Tribes

(v) Beneficiaries of Differential Rate of Interest (DRI) scheme
(vi) Beneficiaries under Swarna Jayanti Shahari Rojgar Yojana (SJSRY)
(vii) Beneficiaries under the Scheme for Liberation and Rehabilitation of Scavengers
(SLRS).
(viii) Self Help Groups (SHGs)

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