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RBI ups priority loan target for foreign banks

July 21, 2012

Reserve Bank of India’s logo.—Reuters Photo
Reserve Bank of India’s logo.—Reuters Photo

MUMBAI: The Reserve Bank of India (RBI) has increased the priority sector lending target for foreign banks with 20 branches or more to 40 per cent from 32 per cent in a phased manner over a maximum period of five years starting April 1, 2013.

In revised guidelines on priority sector lending issued on Friday, the central bank said these lenders would have to submit an action plan for achieving the target over a specific time frame to be approved by the RBI.

State-run banks already have a priority sector lending target of 40 per cent.

Typically, priority sector lending includes small value loans to farmers for agriculture and allied activities, loans to micro and small enterprises and other low income groups.

The three biggest foreign banks in India are Standard Chartered, HSBC and Citigroup.

Foreign banks with less than 20 branches will continue to have a target of 32 per cent, the RBI said.