A notification from the central bank has further said that, the incremental bank loans to medium service enterprises extended after November 13, 2013, up to the credit limit of Rs 10 crores, would qualify as priority sector advances. In line with the above, similar incremental loans to micro and small service enterprises up to the credit limit of Rs 10 crores, (as against the present ceiling of Rs 5 crores), shall also be treated as priority sector advances.
Both the above dispensation will remain in force up to March 31, 2014.
Priority sector lending mandates commercial banks to lend to the marginal sectors including agriculture, women's self-help groups, fisheries and small businesses, among others.
RBI’s recent move will encourage banks, which face challenges to meet their priority sector lending (constituting as much as 42 per cent of total advances of all commercial banks) targets every year, to lend to the medium enterprises sector and make their funds more productive.