PRIORITY SECTOR IN INDIAPRIORITY SECTOR IN INDIA

Priority sectorPriority sector

Priority sector lending has been given Priority sector lending has been given importance by Reserve Bank of India importance by Reserve Bank of India wherein banks provide specified portion of wherein banks provide specified portion of funds to few specific sectors like funds to few specific sectors like agriculture; micro, small and medium agriculture; micro, small and medium enterprises. Basically this is meant for all enterprises. Basically this is meant for all round development of economy.round development of economy.

This sector contributes nearly one-third to This sector contributes nearly one-third to the national income of India.the national income of India.

1. Direct Agricultural Loans1. Direct Agricultural Loans

Under this category, loans are directly given to the farmers Under this category, loans are directly given to the farmers in form of tractor loan, dairy loan, crop loan, etc. These in form of tractor loan, dairy loan, crop loan, etc. These loans are given either for a short-term period (which is not loans are given either for a short-term period (which is not more than 12 months) or for a medium and long-term more than 12 months) or for a medium and long-term period (which is not more than 36 months).period (which is not more than 36 months).

Short-term loans are given to meet agricultural expenses Short-term loans are given to meet agricultural expenses and maintenance of assets such as a tractor, pumping and maintenance of assets such as a tractor, pumping machine, bore well, etc.machine, bore well, etc.

Medium and long-term loans are given for agricultural Medium and long-term loans are given for agricultural activit ies l ike land reclamation, farm building, farm activit ies l ike land reclamation, farm building, farm mechanisation, and so on.mechanisation, and so on.

Here, farmers are provided loans at concessional rates of interest. Here, farmers are provided loans at concessional rates of interest. Indirect agricultural loans benefit the farmers in the long run. These Indirect agricultural loans benefit the farmers in the long run. These loans are given for cattle feed, warehouse, seeds, pesticides, rural loans are given for cattle feed, warehouse, seeds, pesticides, rural electrification, subscription of bonds issued by NABARD, boring electrification, subscription of bonds issued by NABARD, boring equipments, etc.equipments, etc.

2. Indirect Agricultural Loans2. Indirect Agricultural Loans

Owners of taxis, trucks, buses, auto-rickshaws, cars, bullock-carts, camel, etc. Small road and transport operators get loans based on the conditions mentioned in the notification issued by the Government of India.

Bank mainly provides loans for the following purposes:

• Purchase of vehicles.• Purchase of spare parts.• Carrying out major repairs.• Working capital requirements.

Bank provides loans to self-employed persons like:Freelance journalists, Owners of health care centers, Beauty

parlours,Photographers, Fashion designers, and so on.

The borrowing limit will be an aggregate of fixed capital and working capital requirements of a professional and self-employed person.

Rate of interest on educational loan varies in accordance with the ‘Finance Bill’ issued by the Government of India.

Banks provide the consumption loan to weaker sections of society Banks provide the consumption loan to weaker sections of society that include small farmers, landless agricultural workers, rural that include small farmers, landless agricultural workers, rural artisans, barbers, washer men, carpenters, etc., who have no artisans, barbers, washer men, carpenters, etc., who have no savings in their hands.savings in their hands.

People of weaker sections need to borrow money for their People of weaker sections need to borrow money for their immediate requirements like marriage, festivals, illnesses, etc.immediate requirements like marriage, festivals, illnesses, etc.