Foreign banks seek more time to adhere to norms

Reserve Bank of India (RBI) received a request from large foreign banks operating in the country to
to extend the timeline for adhering to the new priority sector norms.

It may be recalled that the new priority sector norms makes it mandatory for foreign banks with over 20 branches to allocate at least 40 percent of its credit to priority sector. The new norms will come into effect in five years. Till now, the priority sector lending limit for foreign banks is 32 percent.

Foreign banks also requested the central bank to widen the definition of priority sector to include loans to infrastructure and exporters as well. RBI recently abandoned the practice of considering export credit as priority sector lending.

Further, some foreign banks want the RBI to encourage the priority sector lending requirement to be met by investing in relevant securitisation structures.

Commercial bank credit to agriculture, small and medium enterprises, micro credit, education loans and housing loans at the end of February 2013 stood at Rs 1,507,100 crore.