RBI, bank chief's discuss possibility of revising priority sector lending norms

MUMBAI: The Reserve Bank of India today discussed the possibility of revision in priority sector lending norms with bank chiefs, who pressed for some modifications in the final guidelines on the issue released in July.

The issues discussed included classification of credit to export units and elevated lending targets to agriculture, bankers coming out of the meeting told reporters.

"We've given some of our views, let them examine. We've raised a lot of issues and RBI is very open to discuss, (this) is what they have indicated," state-run Union Bank of India Chairman and Managing Director D Sarkar told reporters.

He said the core of bankers' reservations revolve around definitions of what qualifies as priority sector lending.

Every bank, he said, will soon be submitting data in this regard to the RBI, whose main concern is to ensure a flow of credit to agriculture.

Even though RBI released the final guidelines on priority sector lending in July, concerns expressed by bankers had prompted Subbarao to announce that norms will be revisited.

According to him, bankers have expressed displeasure over the RBI putting a foreign bank with over 20 branches in the country at par with domestic ones on priority sector lending.

To meet credit needs of large sections of population who had no access to institutional finance, RBI created the framework of priority sector lending with mandated targets.