Extending liquidity support to the medium enterprises, the Reserve Bank of India (RBI) has allowed banks for classifying loans given to medium manufacturing enterprises after November 13 as priority sector advance.
As per the RBI’s notification, the incremental bank loans extended to medium service enterprises, after November 13, 2013, up to the credit limit of Rs.10 crore, would qualify as priority sector advances. Besides, India’s apex bank also raised the loan limit given to micro and small service enterprises to Rs 10 crore from Rs 5 crore that will be treated as priority sector advance. This facility shall remain open till March, 2014.
Currently, under priority sector advance, most banks are mandated to lend 40% of their loans to agriculture, micro and small enterprises, poor people for housing, students for education and other low income groups and weaker sectors. This is essentially meant for an all round development of the economy as opposed to focusing only on the financial sector.
