Date : 25 Aug 2011
Committee to re-examine the existing classification and suggest revised guidelines with regard to priority sector lending classification and related issues
The Reserve Bank of India has set up a Committee to re-examine the existing classification and suggest revised guidelines with regard to priority sector lending classification and related issues.
Shri M. V. Nair, CMD, Union Bank of India will chair the Committee. Other members of the Committee include,
Dr. Deepali Pant Joshi, CGM-in -Charge, RBI, Rural Planning and Credit Department will be the Member Secretary. The Committee will submit its report in four months from the date of its first meeting.
The Terms of reference of the committee are as under:-
To revisit the current eligibility criteria for classification of bank loans as priority sector with reference to
To comprehensively review and fine-tune the definition of direct and indirect priority sector finance/ lending, especially loans advanced to/ routed through corporate entities, cooperative societies.
To consider if bank lending via financial intermediaries like Non-Banking Finance Companies, Housing Finance Companies, etc., for eligible categories of borrowers and activities could be classified under the priority sector and if so, to lay down the conditions subject to which this classification would be admissible .
To consider the desirability, or otherwise of capping interest rate on loans under the eligible categories of the priority sector
To review the existing Management Information System (MIS) prevalent in banks, and suggest ways to streamline the same in terms of frequency of compliance, data consistency and data integrity.
To consider and suggest the manner and periodicity of conducting impact evaluation studies of credit flows to different segments of priority sector and arrive at various policy options.
Any other issues and concerns germane to the subject matter.
The Committee will submit the report within four months from the date of its first meeting.
The sub-committee of the Central Board of Directors of the Reserve Bank to study issues and concerns in the MFI sector (Malegam Committee) recommended that the existing guidelines on bank lending to the priority sector be revisited. Requests were also received from various quarters in the recent past to relook at the definition of the priority sector, especially where bank finance was being routed through other agencies. In this backdrop, it has been proposed in Paragraph 94 of the Monetary Policy Statement 2011-12 “to appoint a committee to re-examine the existing classification and suggest revised guidelines with regard to priority sector lending classification.”
Assistant General Manager
Press Release : 2011-2012/299