The Hindu Business Line : RBI raises priority sector home loan cap

Mumbai May 2 Now, housing loans up to Rs 20 lakh and education loan up to Rs 10 lakh for domestic education and up to Rs 20 lakh for overseas education will be treated as priority sector advances. Earlier housing loans of Rs 15 lakh qualified as priority sector lending.

An RBI circular has also defined direct finance to corporates for agriculture and allied activity of up to Rs 1 crore as priority sector lending by banks.

The RBI has altered the definition of micro-credit for banks. "The provision of credit and other financial services and products of very small amounts not exceeding Rs 50,000 per borrower, either directly or indirectly through a self help group mechanism or to NBFC/MFI for on-lending up to Rs 50,000 per borrower, will constitute micro-credit," says the RBI.

However, the RBI has maintained total priority sector advances would constitute 40 per cent of adjusted net bank credit or credit equivalent amount of off-balance sheet exposure, whichever is higher. For foreign banks, it stands at 32 per cent. Agricultural advances will continue to form 18 per cent of adjusted net bank credit or credit equivalent amount of off-balance sheet exposure, whichever is higher.

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