What's Happening?
A report from the State Level Bankers’ Committee in Ranchi reveals that while banks have surpassed the national benchmark for priority sector lending, they have not met the Reserve Bank of India's (RBI)
mandate for agricultural credit. As of September 30, 2025, priority sector advances constituted 50.11% of total advances, exceeding the national benchmark of 40%. However, agricultural credit only accounted for 14.87% of total advances, falling short of the 18% target set by the RBI. The report highlights a policy issue within banks regarding the proportionate increase in agricultural credit, which is crucial for rural economic development.
Why It's Important?
The shortfall in agricultural credit poses a challenge to the prescribed priority sector lending, impacting the financial needs of the rural economy. This gap could hinder agricultural development and affect the livelihoods of farmers who rely on bank loans for their operations. Addressing this issue is vital for ensuring sustainable growth in the agricultural sector, which is a significant component of the national economy. The report calls for immediate action to fill these gaps and support rural financial needs.
What's Next?
The issue has been raised in previous SLBC meetings and agriculture sub-committee meetings, indicating ongoing concerns. Immediate steps are necessary to address the credit gap and meet the RBI's mandate. Banks may need to revise their lending policies to ensure adequate support for the agricultural sector, potentially involving government intervention or policy adjustments.
