RBI sets direct agri-lending target at 11.57%

Reserve Bank of India (RBI) today directed banks that they should lend at least 11.57 per cent of their funds directly to non-corporate farmers in the fiscal 2015-16.
RBI today set the target for direct lending by banks to agriculture under priority sector at 11.57 per cent, which is based on the system-wide average of the last three years' achievement with regard to overall direct lending to non-corporate farmers.
"It is hereby brought to the notice of all concerned that the applicable system-wide average figures for computing achievements under priority sector lending for the FY 2015-16 is 11.57 per cent," the central bank said in a notification.

The foreign banks with more than 20 branches will continue to be guided by their action plans as submitted by them and approved by RBI, it added.
The target for direct lending by banks to agriculture under priority sector norms has aimed to increase the flow of credit directly to farmers.
In an effort to increase direct lending to agriculture, the target for direct lending to small and marginal farmers is increased to 7 per cent for 2015-16 and to 8 per cent for 2016-17.

Besides, a variety of corporate loans have been precluded from getting direct lending status to ensure that overall lending to agriculture, including medium and large farmers, increases.

Earlier in July, RBI had said the government has expressed concerns arising out of adverse impact of any reduction in direct credit to individual farmers due to weather-related difficulties.
RBI also said that failing the priority sector lending target by banks will attract the usual penalties for shortfall.