The policy on priority sector lending has been in place in India for almost five decades and banks are required to direct at least 40% of their overall credit towards the priority sector. The priority sector encompasses a broad range of economic activities such as the provision of credit to small and marginal farmers, micro enterprises and weaker sections aiming to address systemic equity gaps. Growth considerations are also addressed through this policy as the priority sector includes activities that serve as economic multipliers like exports, medium enterprises and corporate farmers.
