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Page 1 Banking- 2 (Economy) Visit our website www.sleepyclasses.com or our YouTube channel for entire GS Course FREE of cost Also Available: Prelims Crash Course || Prelims T est Series Page 2 Banking- 2 (Economy) Visit our website www.sleepyclasses.com or our YouTube channel for entire GS Course FREE of cost Also Available: Prelims Crash Course || Prelims T est Series 1. Priority Sector Lending 1 ............................................................................................... What are the categories under ‘Agriculture’? 1 .............................................................................. Limits prescribed for loans to MSMEs 1 .......................................................................................... Khadi and Village Industries Sector (KVI) 1 ................................................................................... PMJDY and MUDRA? 2 ....................................................................................................................... Applicable limit and purpose for social infrastructure loans 2 .................................................. Bank credit to Micro Finance Institutions (MFI)? 2 ...................................................................... Applicable limit and purpose for loans for renewable energy under priority sector 2 ........ Loan limit for education under priority sector 2 ........................................................................... Limit for housing loans under priority sector 2 .............................................................................. Weaker Sections under priority sector 2 ......................................................................................... 2. Priority Sector Lending Certi?cates (PSLCs) 3 ..................................................... Rate of interest for loans under priority sector? 3 ......................................................................... Monitoring of Priority Sector Lending targets 3 ............................................................................ Non-achievement of Priority Sector targets 3 ............................................................................... Changes made to PSL 3 ........................................................................................................................ 3. T erms explained 4 ............................................................................................................. Adjusted Net Bank Credit (ANBC) 4 ................................................................................................. Credit Equivalent Amount of Off-Balance Sheet Exposure (CEOBE) 4 ................................... What is included under Weaker Sections under priority sector? 4 .......................................... 4. Banking Sector Reforms 4 ............................................................................................. Indradhanush Plan 4 ............................................................................................................................ Capitalisation 5 ...................................................................................................................................... De-stressing 5 ......................................................................................................................................... Empowerment 5 ..................................................................................................................................... Framework of accountability 5 .......................................................................................................... Governance Reforms 5 ......................................................................................................................... 5. Indradhanush 2.0 5 ........................................................................................................... Recapitalisation Bonds 5 ..................................................................................................................... www.YouTube.com/SleepyClasses www.SleepyClasses.com T able of Contents Page 3 Banking- 2 (Economy) Visit our website www.sleepyclasses.com or our YouTube channel for entire GS Course FREE of cost Also Available: Prelims Crash Course || Prelims T est Series 1. Priority Sector Lending 1 ............................................................................................... What are the categories under ‘Agriculture’? 1 .............................................................................. Limits prescribed for loans to MSMEs 1 .......................................................................................... Khadi and Village Industries Sector (KVI) 1 ................................................................................... PMJDY and MUDRA? 2 ....................................................................................................................... Applicable limit and purpose for social infrastructure loans 2 .................................................. Bank credit to Micro Finance Institutions (MFI)? 2 ...................................................................... Applicable limit and purpose for loans for renewable energy under priority sector 2 ........ Loan limit for education under priority sector 2 ........................................................................... Limit for housing loans under priority sector 2 .............................................................................. Weaker Sections under priority sector 2 ......................................................................................... 2. Priority Sector Lending Certi?cates (PSLCs) 3 ..................................................... Rate of interest for loans under priority sector? 3 ......................................................................... Monitoring of Priority Sector Lending targets 3 ............................................................................ Non-achievement of Priority Sector targets 3 ............................................................................... Changes made to PSL 3 ........................................................................................................................ 3. T erms explained 4 ............................................................................................................. Adjusted Net Bank Credit (ANBC) 4 ................................................................................................. Credit Equivalent Amount of Off-Balance Sheet Exposure (CEOBE) 4 ................................... What is included under Weaker Sections under priority sector? 4 .......................................... 4. Banking Sector Reforms 4 ............................................................................................. Indradhanush Plan 4 ............................................................................................................................ Capitalisation 5 ...................................................................................................................................... De-stressing 5 ......................................................................................................................................... Empowerment 5 ..................................................................................................................................... Framework of accountability 5 .......................................................................................................... Governance Reforms 5 ......................................................................................................................... 5. Indradhanush 2.0 5 ........................................................................................................... Recapitalisation Bonds 5 ..................................................................................................................... www.YouTube.com/SleepyClasses www.SleepyClasses.com T able of Contents Implications of Issuance of Recapitalization Bonds 6 ................................................................. 6. Capital Adequacy 6 .......................................................................................................... 7. Basel III 6 .............................................................................................................................. BASEL Objectives 6 ............................................................................................................................... Basel-III is built upon three solid pillars of 7 ................................................................................... BASEL & India 7 ..................................................................................................................................... 8. Financial Inclusion 7 ........................................................................................................ 9. Pradhanmantri Jan Dhan Yojana (PMJDY) 7 ......................................................... 10.Sukanya Samridhi Account 8 ....................................................................................... 11.Financial Inclusion Index 8 ........................................................................................... 12.PSB Loans in 59 Minutes 8 ........................................................................................... 13.Kisan Credit Card (KCC) 9 ............................................................................................ 14.Small Banks 9 ..................................................................................................................... 15.Payment Banks 9 .............................................................................................................. 16.India Post Payments Bank 10 ......................................................................................... 17.Regional Rural Banks 10 .................................................................................................. 18.WLTF Banks (Wholesale and long-term ?nance banks) 11 ............................... www.YouTube.com/SleepyClasses www.SleepyClasses.com Page 4 Banking- 2 (Economy) Visit our website www.sleepyclasses.com or our YouTube channel for entire GS Course FREE of cost Also Available: Prelims Crash Course || Prelims T est Series 1. Priority Sector Lending 1 ............................................................................................... What are the categories under ‘Agriculture’? 1 .............................................................................. Limits prescribed for loans to MSMEs 1 .......................................................................................... Khadi and Village Industries Sector (KVI) 1 ................................................................................... PMJDY and MUDRA? 2 ....................................................................................................................... Applicable limit and purpose for social infrastructure loans 2 .................................................. Bank credit to Micro Finance Institutions (MFI)? 2 ...................................................................... Applicable limit and purpose for loans for renewable energy under priority sector 2 ........ Loan limit for education under priority sector 2 ........................................................................... Limit for housing loans under priority sector 2 .............................................................................. Weaker Sections under priority sector 2 ......................................................................................... 2. Priority Sector Lending Certi?cates (PSLCs) 3 ..................................................... Rate of interest for loans under priority sector? 3 ......................................................................... Monitoring of Priority Sector Lending targets 3 ............................................................................ Non-achievement of Priority Sector targets 3 ............................................................................... Changes made to PSL 3 ........................................................................................................................ 3. T erms explained 4 ............................................................................................................. Adjusted Net Bank Credit (ANBC) 4 ................................................................................................. Credit Equivalent Amount of Off-Balance Sheet Exposure (CEOBE) 4 ................................... What is included under Weaker Sections under priority sector? 4 .......................................... 4. Banking Sector Reforms 4 ............................................................................................. Indradhanush Plan 4 ............................................................................................................................ Capitalisation 5 ...................................................................................................................................... De-stressing 5 ......................................................................................................................................... Empowerment 5 ..................................................................................................................................... Framework of accountability 5 .......................................................................................................... Governance Reforms 5 ......................................................................................................................... 5. Indradhanush 2.0 5 ........................................................................................................... Recapitalisation Bonds 5 ..................................................................................................................... www.YouTube.com/SleepyClasses www.SleepyClasses.com T able of Contents Implications of Issuance of Recapitalization Bonds 6 ................................................................. 6. Capital Adequacy 6 .......................................................................................................... 7. Basel III 6 .............................................................................................................................. BASEL Objectives 6 ............................................................................................................................... Basel-III is built upon three solid pillars of 7 ................................................................................... BASEL & India 7 ..................................................................................................................................... 8. Financial Inclusion 7 ........................................................................................................ 9. Pradhanmantri Jan Dhan Yojana (PMJDY) 7 ......................................................... 10.Sukanya Samridhi Account 8 ....................................................................................... 11.Financial Inclusion Index 8 ........................................................................................... 12.PSB Loans in 59 Minutes 8 ........................................................................................... 13.Kisan Credit Card (KCC) 9 ............................................................................................ 14.Small Banks 9 ..................................................................................................................... 15.Payment Banks 9 .............................................................................................................. 16.India Post Payments Bank 10 ......................................................................................... 17.Regional Rural Banks 10 .................................................................................................. 18.WLTF Banks (Wholesale and long-term ?nance banks) 11 ............................... www.YouTube.com/SleepyClasses www.SleepyClasses.com 1. Priority Sector Lending • RBI has directed that Domestic banks and Foreign banks with 20 and more branches to disburse 40% of the Net Bank Credit (NBC) to certain Priority sectors decided by RBI. • The Foreign banks have been given a target of 32% of the Net Bank Credit to priority sector. • Net Bank Credit excludes the outstanding deposits under the FCNR (B) and NRNR (Non-Resident Non-Repatriable T erm Deposit Account) Schemes. • PSL includes the following categories 1. Agriculture 2. Micro, Small and Medium Enterprises 3. Export Credit 4. Education 5. Housing 6. Social Infrastructure 7. Renewable Energy 8. Others • T otal Priority Sector target of 40 percent for foreign banks with less than 20 branches What are the categories under ‘Agriculture’? • Three sub-categories: ?Farm credit ?Agriculture infrastructure and ?Ancillary activities Limits prescribed for loans to MSMEs • No limits are prescribed for bank loans. • Bank loans to MSMEs engaged in providing or rendering of services and de?ned in terms of investment in equipment under MSMED Act, 2006, irrespective of loan limits, are eligible for classi?cation under priority sector, w.e.f. March 1, 2018. Khadi and Village Industries Sector (KVI) • All loans to units in the KVI sector will be eligible for classi?cation under the sub-target of 7.5 percent prescribed for Micro Enterprises under priority sector. www.YouTube.com/SleepyClasses www.SleepyClasses.com 1 Page 5 Banking- 2 (Economy) Visit our website www.sleepyclasses.com or our YouTube channel for entire GS Course FREE of cost Also Available: Prelims Crash Course || Prelims T est Series 1. Priority Sector Lending 1 ............................................................................................... What are the categories under ‘Agriculture’? 1 .............................................................................. Limits prescribed for loans to MSMEs 1 .......................................................................................... Khadi and Village Industries Sector (KVI) 1 ................................................................................... PMJDY and MUDRA? 2 ....................................................................................................................... Applicable limit and purpose for social infrastructure loans 2 .................................................. Bank credit to Micro Finance Institutions (MFI)? 2 ...................................................................... Applicable limit and purpose for loans for renewable energy under priority sector 2 ........ Loan limit for education under priority sector 2 ........................................................................... Limit for housing loans under priority sector 2 .............................................................................. Weaker Sections under priority sector 2 ......................................................................................... 2. Priority Sector Lending Certi?cates (PSLCs) 3 ..................................................... Rate of interest for loans under priority sector? 3 ......................................................................... Monitoring of Priority Sector Lending targets 3 ............................................................................ Non-achievement of Priority Sector targets 3 ............................................................................... Changes made to PSL 3 ........................................................................................................................ 3. T erms explained 4 ............................................................................................................. Adjusted Net Bank Credit (ANBC) 4 ................................................................................................. Credit Equivalent Amount of Off-Balance Sheet Exposure (CEOBE) 4 ................................... What is included under Weaker Sections under priority sector? 4 .......................................... 4. Banking Sector Reforms 4 ............................................................................................. Indradhanush Plan 4 ............................................................................................................................ Capitalisation 5 ...................................................................................................................................... De-stressing 5 ......................................................................................................................................... Empowerment 5 ..................................................................................................................................... Framework of accountability 5 .......................................................................................................... Governance Reforms 5 ......................................................................................................................... 5. Indradhanush 2.0 5 ........................................................................................................... Recapitalisation Bonds 5 ..................................................................................................................... www.YouTube.com/SleepyClasses www.SleepyClasses.com T able of Contents Implications of Issuance of Recapitalization Bonds 6 ................................................................. 6. Capital Adequacy 6 .......................................................................................................... 7. Basel III 6 .............................................................................................................................. BASEL Objectives 6 ............................................................................................................................... Basel-III is built upon three solid pillars of 7 ................................................................................... BASEL & India 7 ..................................................................................................................................... 8. Financial Inclusion 7 ........................................................................................................ 9. Pradhanmantri Jan Dhan Yojana (PMJDY) 7 ......................................................... 10.Sukanya Samridhi Account 8 ....................................................................................... 11.Financial Inclusion Index 8 ........................................................................................... 12.PSB Loans in 59 Minutes 8 ........................................................................................... 13.Kisan Credit Card (KCC) 9 ............................................................................................ 14.Small Banks 9 ..................................................................................................................... 15.Payment Banks 9 .............................................................................................................. 16.India Post Payments Bank 10 ......................................................................................... 17.Regional Rural Banks 10 .................................................................................................. 18.WLTF Banks (Wholesale and long-term ?nance banks) 11 ............................... www.YouTube.com/SleepyClasses www.SleepyClasses.com 1. Priority Sector Lending • RBI has directed that Domestic banks and Foreign banks with 20 and more branches to disburse 40% of the Net Bank Credit (NBC) to certain Priority sectors decided by RBI. • The Foreign banks have been given a target of 32% of the Net Bank Credit to priority sector. • Net Bank Credit excludes the outstanding deposits under the FCNR (B) and NRNR (Non-Resident Non-Repatriable T erm Deposit Account) Schemes. • PSL includes the following categories 1. Agriculture 2. Micro, Small and Medium Enterprises 3. Export Credit 4. Education 5. Housing 6. Social Infrastructure 7. Renewable Energy 8. Others • T otal Priority Sector target of 40 percent for foreign banks with less than 20 branches What are the categories under ‘Agriculture’? • Three sub-categories: ?Farm credit ?Agriculture infrastructure and ?Ancillary activities Limits prescribed for loans to MSMEs • No limits are prescribed for bank loans. • Bank loans to MSMEs engaged in providing or rendering of services and de?ned in terms of investment in equipment under MSMED Act, 2006, irrespective of loan limits, are eligible for classi?cation under priority sector, w.e.f. March 1, 2018. Khadi and Village Industries Sector (KVI) • All loans to units in the KVI sector will be eligible for classi?cation under the sub-target of 7.5 percent prescribed for Micro Enterprises under priority sector. www.YouTube.com/SleepyClasses www.SleepyClasses.com 1 PMJDY and MUDRA? • In terms of revised guidelines issued by Department of Financial Services, Ministry of Finance, dated September 24, 2018, Overdraft limit to Pradhan Mantri Jan-Dhan Yojana (PMJDY) account holder has been raised to ? 10,000/-, age limit of 18-60 years has been revised to 18-65 years and there will not be any conditions attached for overdraft up to ? 2,000/-. • These overdrafts will qualify as achievement of the target for lending to Micro Enterprises. • Outstanding deposits with SIDBI and MUDRA Ltd. on account of priority sector shortfall. Applicable limit and purpose for social infrastructure loans • Bank loans up to a limit of ? 50 million per borrower for building social infrastructure for activities namely schools, health care facilities, drinking water facilities and sanitation facilities (including loans for construction/refurbishment of toilets and improvement in water facilities in the household) in Tier II to Tier VI centres are eligible for classi?cation under priority sector. Bank credit to Micro Finance Institutions (MFI)? • Lending to individuals/members of SHGs/JLGs for water and sanitation facilities is also eligible for classi?cation as priority sector loans under ‘Social Infrastructure’ subject to certain criteria. • Bank credit to MFIs (NBFC-MFIs, societies, trusts, etc) extended for on-lending to individuals and also to members of SHGs/JLGs is eligible for categorisation as priority sector advance under respective categories viz., Agriculture, Micro, Small and Medium Enterprises, Social Infrastructure and Others Applicable limit and purpose for loans for renewable energy under priority sector • Bank loans up to a limit of ? 150 million to borrowers for purposes like solar based power generators, biomass based power generators, wind mills, micro-hydel plants and for non-conventional energy based public utilities viz. street lighting systems, and remote village electri?cation are eligible to be classi?ed under priority sector loans under ‘Renewable Energy’ . • For individual households, the loan limit is ? 1 million per borrower Loan limit for education under priority sector • Loans to individuals for educational purposes including vocational courses upto 1 million irrespective of the sanctioned amount are eligible for classi?cation under priority sector. Limit for housing loans under priority sector • Loans to individuals up to ?3.5 million in metropolitan centres (with population of ten lakh and above) and loans up to ? 2.5 million in other centres for purchase/construction of a dwelling unit per family, are eligible to be considered as priority sector provided the overall cost of the dwelling unit in the metropolitan centre and at other centres does not exceed ? 4.5 million and ? 3 million, respectively. • Housing loans to banks’ own employees are not eligible for classi?cation under priority sector. Weaker Sections under priority sector www.YouTube.com/SleepyClasses www.SleepyClasses.com 2Read More
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