Loans to medium businesses to be treated as priority sector advances

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Loans to medium businesses to be priority sector advances
As per a Reuters report, fresh loans tendered to medium enterprises in the manufacturing space are henceforth allowed by RBI to be given priority lending status. As such all loans disbursed after November 13 to the sector shall be treated by banks as priority sector loans. The step in the direction is indicative of the apex institutions efforts to ramp up the liquidity support to small and medium enterprises.

As part of the priority sector lending, most of the banks are required to lend a minimum of 40% of their advances to SMEs, agriculture, students for pursuing education, poor class for housing as well as other weaker sections and low income groups.

Further, the apex body also increased the credit limit extended to micro and small service enterprises that shall qualify as priority sector advance from Rs. 50 million to Rs. 100 million. The medium service companies are also allowed higher bank loans extended after November 13 upto Rs. 100 million. The scheme shall remain open until the end of the F.Y 2013-2014.

As per the Economic Times report, export sector too shall be soon accorded the priority sector lending status. And in the report, M. Rafeeque Ahmed, President of Federation of Indian Export Organizations (FIEO) was quoted saying "The idea is to ensure credit flows to the exports sector. Banks will be compelled to lend to exporters with priority sector lending status. I hope the lenders will give priority sector status to exports and I am sure something will come up in the next couple of months".

Story first published: Tuesday, November 26, 2013, 16:24 [IST]
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