New Delhi: The Reserve Bank of India (RBI) has given priority sector tag to bank loans extended to registered non-bank lenders for financing agriculture, small businesses and home buyers within specified limits.
The RBI said in a statement on developmental and regulatory policies as part of its third bi-monthly monetary policy review this fiscal that it has accorded priority sector status to bank loans to registered non-banking finance companies or NBFCs for on-lending to finance agriculture activities upto ₹1 million. The same tag will be available to bank lending to NBFCs for on-lending to micro, small and small enterprises for upto ₹2 million and to home buyers for upto ₹2 million.
Agriculture accounts for about 17% of the economy but is the largest employer in the country. Small businesses contribute significantly to the value addition in the manufacturing sector. Many exporters are small businesses. The authorities have been trying to promote affordable housing in recent months to stimulate the real estate sector, which is also a major job creator.
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The central bank said detailed guidelines will be issued by August.
The decision is taken with “a view to further increasing the credit flow to certain priority sectors which contribute significantly to the economic growth in terms of export and employment, and recognizing the role played by NBFCs in providing credit to these sectors," said the RBI statement.