In response to feedback from our subscribers, statistics of credit outstanding by priority sector are now available on the CEIC Data Manager. Priority sector lending is introduced to increase credit access for certain sectors by the Reserve Bank of India (the central bank). Presently, priority sector lending includes direct and indirect financing of agriculture and allied activities (i.e. dairy, fishery etc.), retail traders involved in essential commodities, micro and small enterprises, other micro-credit and personal loans for education, housing and export credit, among others. Priority sectors tend to be those affecting a broad population, characterised by small-scale, often weak, enterprises, while personal loans are extended for education and housing.

Under the guidelines on lending to priority sectors, 40% of total adjusted net bank credit (ANBC) or the credit-equivalent amount of off-balance sheet exposure (CEAOBSE), whichever is higher (32% for foreign banks with less than 20 branches in India) are to be extended to priority sectors. Banks are also required to achieve a set of sub-targets of loan proportions for certain types of priority loans. Failure to achieve these targets means that these banks may be required to deposit an amount not exceeding the computed shortfall in priority sector loans to specified funds, including the Rural Infrastructure Development Fund (RIDF) and the Small Enterprise Development Fund (SEDF).

Outstanding credit to priority sectors has grown in line with the expansion of scheduled commercial bank credit though relatively slower than the growth in overall credit outstanding. As of September 2013, priority sector loans grew by 17.6% year-on-year to INR16.44 trillion, accounting for approximately 31.0% of total credit outstanding; total credit outstanding grew by 17.9% during the corresponding period. The growth in loans to priority sectors was driven by credit to micro and small manufacturing, and service-based enterprises, as well as loans extended to entities engaged in agriculture and allied activities. Outstanding priority loans to agriculture and allied activities grew to INR6.10 trillion during September 2013 compared to INR5.39 trillion during the same month of the previous year.