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May 03, 2013, 01.47 PM IST | Source: Moneycontrol.com

RBI sets measures to revive banks' priority lending

In its annual monetary policy statement, the central bank has devised measures for banks in terms of management performance, online applications and credit monitoring.

Moneycontrol Bureau

Based on K R Kamath committee recommendations, the Reserve Bank of India (RBI) took a relook on priority sector lending wherein most of the banks are falling short of meeting the mandated target of 40 percent. In its annual monetary policy statement, the central bank has devised measures for banks in terms of management performance, online applications and credit monitoring.

"Banks need to strengthen their existing systems of monitoring credit growth to the sector and put in place a system-driven comprehensive performance management information system (MIS) at every supervisory level (branch, region, zone, head office) which should be critically evaluated on a regular basis," RBI said.

RBI has suggested of putting in place a system of e-tracking of MSE loan applications and monitor the loan application disposal process in banks, giving branch-wise, region-wise, zone-wise and state-wise positions. The central bank will provide a format to banks in this regard.

Moreover, RBI has proposed to enhance the loan limit for micro and small enterprises (MSEs) in the services sector from Rs 2 crore to Rs 5 crore per borrower while the limit for indirect finance to agriculture is set at Rs 5 crore as against Rs 1 crore earlier. Indirect credit includes dealers or sellers of fertilizers, pesticides, seeds, cattle feed, poultry feed, agricultural implements and other inputs.

Under the head of direct agriculture loans, it is also planned to double the limit on pledge loans (warehouse receipts) from the current limit of Rs 25 lakh to Rs 50 lakh. Individual farmers can avail this facility.

saikat.das@network18online.com

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