Priority sector lending: Farms, education pose challenges

As on Aug 18, education loans outstanding were Rs 59,300 cr against Rs 61,500 cr as on Aug 19, 2016

Meeting priority sector lending targets could be challenging for banks this year as at least two sectors — agriculture and education — are topping the list of stressed assets on the retail side.

While growth in loans for agriculture and allied activates is at a five-year low, that for education has slipped into negative territory. 

Both education and agriculture lending are components of priority sector lending, and if banks fail to meet the targets they need to deploy amounts equal to the shortfall in the low-yielding Rural Infrastructure Development Fund (RIDF). Notably, banks are increasing restructuring in both the categories