Page 200 - DMGT303_BANKING_AND_INSURANCE

Unit 9: Priority Sector Lending

Every stage of progress for each and every case is being tracked through the CRM there by Notes
ensuring transparency. All waivers generated are addressed to client as per the matrix
which decides on the level of approval for particular case. This ensures that client is in
charge for the waivers given to end customer.
Achievements

Total amount recovered - Rs. 80 crores over a period of 2.5 years.
Source: http://www.e-nxt.com/images/case_study_stressed_aassets.pdf

9.13 Summary

 The term priority sector itself suggests that certain sectors of the economy are need to be
taken up on a priority basis for rapid economic development.
 An Intermediate Model that works on banking principles with focus on both savings and
credit activities and where banking services are provided to the clients either directly or
through SHGs.
 There is also a wholesale Banking Model where the clients comprise NGOs, MFIs and SHG
Federations. This Model involves a unique package of providing both loans and capacity
building support to its partners.
 Further, there is an Individual Banking-based Model that has its clients as individuals or
joint liability groups. While programme management and client appraisal in this model
may be a challenge, it is best suited to lending to enterprises.

 The reform of the interest rate regime has constituted an integral part of the financial
sector reforms initiated in our country in 1991.

 Industry related service and business enterprises with investment up to Rs. 10 lakhs in
fixed assets, excluding land and building will be given benefits of small scale sector.
 Domestic scheduled commercial banks having shortfall in lending to priority sector/
agriculture are allocated amounts for contribution to the Rural Infrastructure Development
Fund (RIDF) established in NABARD.
 Priority sector lending by commercial banks is monitored by Reserve Bank of India
through periodical Returns received from them. Performance of banks is also reviewed in
the various set up under the Lead Bank Scheme (at State, District and Block levels).

9.14 Keywords

Direct Agricultural advances: This denote advances given by banks directly to farmers for
agricultural purposes

Priority sector: The sector that certain sectors of the economy are need to be taken up on a
priority basis for rapid economic development.

'Small Scale Service & Business Enterprises': Industry related service and business enterprises
with investment up to Rs. 10 lakhs in fixed assets, excluding land and building will be given
benefits of small scale sector. For computation of value of fixed assets, the original price paid by
the original owner will be considered irrespective of the price paid by subsequent owners.

'Tiny Enterprises': It is given to all small scale units whose investment in plant and machinery is
up to Rs. 25 lakhs, irrespective of the location of the unit.

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