Reserve Bank of India (RBI) has issued a Master Circular on Priority Sector Lending – Targets and Classification on dated July 1, 2015.
The targets / sub-targets set under priority sector lending for all Scheduled Commercial Banks are furnished below:
| Categories | Domestic SCBs with 20 branches and above |
| Total Priority Sector | 40 percent of Adjusted Net Bank Credit (ANBC) or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher |
| Agriculture | 18 percent of ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher |
| Micro Enterprises | 7.5 percent of ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher to be achieved in a phased manner |
| Advances to Weaker Sections | 10 percent of ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher |
RBI vide its guidelines on Interest Rate on Advances dated 17th December 2015 followed by Master Direction dated 29th March 2016 on Interest Rate on Advances, have directed all Scheduled Commercial Banks to calculate Base Rates using the Marginal Cost of Funds.
The Government and RBI do not interfere in fixing the interest rate on loans.
Presently, each bank fix the Marginal Cost Lending Rate (MCLR) based on RBI guidelines and varies from bank to bank.
