The Reserve Bank of India has, through a questionnaire, sought views/comments of all stakeholders on the Terms of Reference for the Nair Committee on Priority Sector Lending . Comments/suggestions/views may be emailed latest by November 15, 2011. It may be recalled that the Reserve Bank of India had appointed a Committee to re-examine the existing classification and suggest revised guidelines with regard to priority sector lending classification and related issues (Chairman : Shri M. V. Nair).
Questionnaire on Terms of Reference
- Is there a case to simplify the approach to Directed lending or do away with the same or ensure a level playing field for all the players?
- Are there any inconsistencies / ambiguities / interpretational issues in the existing guidelines? List them and suggest modifications.
- What are the Nature of Activities presently classified as Priority Sector that need relook?
- Is there any category hitherto not considered under the priority sector, but there are compelling reasons to include the same?
- What are the activities for which the classification changes depending upon the types of Borrower needs to be relooked?
- What are the activities for which the classification changes depending upon the Limit of Loan amount need to be revisited?
- How to ensure that the loans given by banks reach the eligible categories and borrowers? What are present gaps?
- Which sets of the common guidelines for Priority Sector advances needs special attention / treatment to ensure that the targeted categories are the beneficiaries, at the same time the poorest of the poor are not crowded out?
- What are the advances presently routed through certain agencies and presently categorized as direct lending under the priority sector which warrant modifications?
- Are there any categories that are presently categorized as indirect Finance under priority sector, which should be classified as Direct Advances?
- What are the advances presently routed through various Institutions, by way of on-lending, buy-outs or securitization, that are presently not categorized as PS lending, but could be classified so?
- What are the pre-conditions that are to be fulfilled, for doing the same?
- Similarly, are there any sectors / categories of on-lending that are presently categorized as priority sector, which have outlived its need for priority financing?
- What are the categories of Priority Sector advances for which the benefit of interest caps, Subventions or Subsidies be introduced? What are the pre-conditions to qualify for the same?
- Is there any category which has the benefit of interest caps, Subventions or Subsidies but has outlived its purpose or not able to fulfill its objective?
- Whether the current methodology of Penalty for non-achievement of Benchmarks is correct? Are there any specific drawbacks in the existing approach of introduction of these perverse incentives? Are they fulfilling their objectives?
- Is there a scope for a new methodology of harsher penalties as (like monetary penalty, restriction on Branch licensing etc.) / and can the same co-exist with the existing method or should they replace the existing methodology?
- Is there a need to have penalties for those categories for which at present there are targets/ benchmarks but no penalties?
- Is there a need to introduce penalty for erroneous reporting? Suggest a methodology.
- What are the major constraints observed in the present system of MIS relating to priority sector lending?
- Does the present reporting system warrant slight modification to the changing needs or a major overhaul is required?
- What is the technological readiness of various banks’ systems to cope up with the changing reporting needs?
- With reference to modified Reporting system, what will be timeframe required to implement the modification and is there a need for an interim solution, pending the implementation of the final solution?
- For impact evaluation, what are the parameters in the different segments under the Priority Sector that are likely to change due to availability of directed credit?
- What is the acceptable level for each such parameter and where do we stand at present?
- What is the likely time frame, for directed credit thus made available, to show significant improvement for each parameter in normal course?
- Whether any benchmark needs to be withdrawn or reduced or increased or introduced? What is the rationale behind the same?
- Does ANBC calculation methodology necessitate any revision?
- Whether in current practice, the PS lending is skewed towards urban centres / select states? If so, what can be the remedy for equitable growth?
- Is DRI scheme still relevant? Suggest modifications for effective implementation of the scheme?
Chief General Manager
Press Release : 2011-2012/659