Monday, 26 August 2019

Priority Sector Lending -1, Banking Fundamentals to Know for students.


Priority Sector Lending-1
Categories of Priority Sector: 
Agriculture (Direct and Indirect Finance):
Direct loans are made to individual farmers, self-help groups (SHGs) or joint liability groups (JLGs) of individual farmers and to others.
Indirect finance to agriculture includes loans given to companies/persons for agricultural allied activities such as cold storage, stores for agricultural inputs, manufacture of equipment and farm machinery etc.
Small Enterprises (Direct and Indirect Finance): Direct finance to small enterprises includes all loans given to micro and small (manufacturing) enterprises engaged in the manufacture/ production, processing or preservation of goods, and micro and small (service) enterprises and those whose investment in plant and machinery and equipment (original cost excluding land and building and such items) does not exceed Rs. 5 crore and Rs. 2 crore respectively for small enterprises and Rs. 25 lacs and Rs. 10 lacs respectively for micro (tiny) enterprises. 
CAT
Retail Trade: It includes retail traders/private retail traders dealing in essential commodities (fair price shops) and consumer cooperative stores.
Micro Credit: Provision of credit and other financial services and products of very small amounts not exceeding Rs. 50000 per borrower, either directly or through an SHG/JLG mechanism or to NBFC/MFI/NGO on lending up to Rs. 50000 per borrower, will constitute microcredit. 
Educational Loans: Education loans include loans and advances granted to individuals for educational purposes, up to Rs. 10 lacs for studies in India and Rs. 20 lacs for studies abroad.
Housing Loans: Loans up to Rs. 20 lacs to individuals for purchase/construction of a dwelling unit per family (excluding loans granted by banks to their own employees) and loans are given for repairs to damaged dwelling units of families up to Rs. 2 lacs in urban and metropolitan areas.
Farm Mechanisation:*Credit for the purchase of farm equipment and machinery for an agricultural operation like Tractor, Power Tiller, Rice Transplanter, etc.

*Farmers owning a minimum of 5 to 8 acres of perennially irrigated lands are eligible for a loan.
*Repayable over a period of time exceeding 3 years.
*Demand Promissory Note, Loan agreement, Crop Insurance. Land records, quotations, Hypothecation of assets
Horticultural Loan
*Loans for the development of fruit orchards
*All farmers having cultivable lands
*Repayable over a period of time exceeding 3 years
*Demand Promissory Note, Loan agreement, Crop Insurance. Water and soil test report, feasibility certificate from the local horticulture department, records of land, quotation/ estimate, mortgage of land
Land Purchase Loan
*Loan to small and marginal farmers/ landless laborers for the purchase of agricultural land
*Small/ marginal farmers, tenants, sharecroppers subject to landholding criteria
*Repayable over a period of 10 years
*Demand Promissory Note, Loan agreement, Crop Insurance. Mortgage of land to be purchased.
@ Agricultural term loans are provided for the purchase of assets and creation of assets connected with rural activities under agricultural and allied activities
@All categories of farmers and agricultural laborers are eligible for term loans
@Repayable over a period of time exceeding 3 years
@Demand Promissory Note, Loan agreement, Crop Insurance. Land records, hypothecation of the assets created, insurance of the assets
Land Development Loans
#Loans are given for land development projects
#All farmers owning agricultural land are eligible
#Repayable over a period of time exceeding 3 years
#Demand Promissory Note, Loan agreement, Crop Insurance. #Borrower has to produce a report on the estimated cost by an engineer
Minor Irrigation
&.Credit for the creation of irrigation facilities from underground/ surface water sources are covered under the scheme
&.All those farmers who are having known source of water unstable for irrigation purpose
&.Repayable over a period of time exceeding 3 years
&.Demand Promissory Note, Loan agreement, Crop Insurance. Estimate for the civil works, quotations for the assets to be purchased, land records, geologist certificate, feasibility certificate from electricity board.
Crop loan/ working capital loan
*The purpose of the crop loan is to facilitate the agriculturists to carry on seasonal operations i.e. to meet the expenses for raising of seasonal crops
*Agriculturists, tenant farmers, and share croppers who actually cultivate the lands
*Normal period of loan may not exceed one year. Sugarcane crop loans are for 18 months
*Demand Promissory Note, Loan agreement, Hypothecation of crops, Crop Insurance.

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