RBI has formed a panel to review priority sector lending

By | August 13, 2011

A recent press report said that RBI has constituted a 9-member panel to look into various issues related to priority sector lending, including review of loan limits under the segment.

Reports said that the committee will be headed by Mr. M V Nair, Chairman and Managing Director, Union Bank of India and that the panel will re-examine the eligibility criteria for classification of bank loans as priority sector. The panel will also review nature of activities and types of borrowers (individuals versus institutions, corporate and partnership firms) of loans under priority sector segment and the limits on loan amounts.

The panel will review appropriate documentation and due diligence thresholds, to ensure that loans offered by banks are for the eligible categories of purposes and borrowers, which need special attention and treatment. It will also consider the desirability, or otherwise, of capping interest rate on priority loans.

Reports said that the panel, has to submit its report in four months, and will also review the current allocation mechanism for Rural Infrastructure Development Fund (RIDF) and other funds.

The RBI said that it had received requests from various quarters to relook at the definition of the priority sector, especially where bank finance was being routed through other

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About Pradeep Yuvaraj

Pradeep Yuvaraj is a Co-Founder and Director at Finerva Financial Solutions Private Limited, a financial education company focused on personal finance education. He has penned over 250 articles relating to Personal Finance and clocked over 500 hours of educating individuals on managing personal finance. He is a serial entrepreneur and has been associated with 7 Start-ups. His entrepreneurial experience spans industries as varied as Education, Gas Engineering, Automobile Design, Software development and more recently a Pure play presentation design company. Prior to turning entrepreneur in 2005, he has worked for 3 of the top ten companies of the world - Shell, ExxonMobil and Total SA. This experience included handling Branch Operations, Channel Sales and Business Development across 5 states over a period of 8 years. He holds an MBA from Symbiosis and an Electronics Engineering Degree from the University of Pune.

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