Kolkata: The Reserve Bank of India has revised its incentive framework to push banks to increase the flow of priority sector credit to districts with lower credit flow in order to address the regional disparities at the district level.
Accordingly, the central bank has assigned a higher weight of 125% to the incremental priority sector credit in the districts with per capita priority sector credit less than Rs 9000, with effect from FY25.
This effectively means that if a bank gives Rs 100 loan in low credit flow district, it will be considered as Rs 125 priority sector loan.
Earlier from FY22 onwards till date, RBI followed a rule of higher weight of 125% in districts where per capita priority sector credit flow was Rs 6000.
RBI maintains a district wise ranking in terms of per capita credit flow and circulates this with banks so that the lenders raise their efforts as per need to address the gap.
There is also a dis-incentive framework for districts with comparatively higher flow of priority sector credit in which a lower 90% weight is assigned for districts where the per capita priority sector credit flow is greater than Rs 42,000. This threshold was revised from Rs 25000 earlier.
The weight is maintained at 100% for all other districts not mentioned by the central bank.
