Lok Sabha Question No. 5753 (UNSTARRED), answered on 2026-03-30
Subject: Banking Liquidity Stress on Rural Credit and Development Schemes
Ministry: FINANCE
Asked by: Adv Priya Saroj, Ms Iqra Choudhary, Shri Pushpendra Saroj

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA

## UNSTARRED QUESTION NO. 5753

ANSWERED ON MONDAY, 30 MARCH, 2026/ 09 CHAITRA, 1947 (SAKA)

## Banking Liquidity Stress on Rural Credit and Development Schemes

5753. MS IQRA CHOUDHARY:

SHRI PUSHPENDRA SAROJ:

ADV PRIYA SAROJ:

Will the Minister of FINANCE be pleased to state:

- (a)  whether the Union Government has assessed the impact of tightening banking liquidity conditions on the flow of institutional credit to rural development programmes and self-help groups in the country, if so, the details thereof, State-wise, particularly for Uttar Pradesh;
- (b) the extent to which banks implementing rural development schemes have increased reliance on short-term market borrowings, such as Certificates of Deposit, State-wise and district- wise for Uttar Pradesh;
- (c)  whether any review has been conducted by the Government regarding delays in creditlinked rural livelihood and infrastructure projects due to tightening liquidity conditions, if so, the details thereof;
- (d) the number of instances where financial support to rural development programmes faced delays due to banking sector liquidity pressures, State-wise and district-wise for Uttar Pradesh; and
- (e) the corrective steps proposed by the Union Government to ensure uninterrupted credit flow for rural development initiatives despite emerging stress in banking liquidity?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

(a)  and (b): Reserve Bank of India (RBI) endeavours to maintain sufficient liquidity in the banking system to ensure that the productive requirements of the economy including rural sector are met and transmission to market rates remains robust. As informed by the State Level Banker's  Committee  (SLBC)  Uttar  Pradesh,  the  overall  flow  of  institutional  credit  under priority  sectors  including  to  rural  development  programmes  and  self-help  groups  in  Uttar Pradesh, has shown an increasing trend during the last three financial years.

While State-wise data on the flow of institutional credit to rural development programmes and self-help groups in the country is not readily available, the details of loans disbursed in priority sectors in the state of Uttar Pradesh during the last three  years as reported by SLBC Uttar Pradesh are as under:

| Amt. in ₹ Crore       | Amt. in ₹ Crore   | Amt. in ₹ Crore   | Amt. in ₹ Crore                 |
|-----------------------|-------------------|-------------------|---------------------------------|
| Sector                | FY 2023-24        | FY2024-25         | FY 2025-26 (Till December 2025) |
| Agriculture           | 168791            | 187697            | 152807                          |
| MSME                  | 203834            | 236036            | 257351                          |
| Other Priority Sector | 14840             | 13484             | 14608                           |
| Total Priority Sector | 387465            | 437217            | 424766                          |
| SHG Credit Linkage    | 1992              | 2463              | 646                             |

The details of short-term borrowings including Certificates of Deposits by banks are not readily available.

- (c)  and  (d):  No  instances  pertaining  to  delays  in  financing  support  to  rural  development programmes faced due to banking sector liquidity pressures have been reported by SLBC Uttar Pradesh.
- (e): The Government has taken various measures to ensure uninterrupted credit flow for rural development initiatives, including SHGs, which inter-alia include:
- The Priority Sector Lending (PSL) Guidelines of Reserve Bank of India (RBI) issued to banks and Ground Level Agriculture Credit (GLC) targets by the Government to banks act as key policy instruments in scaling up Kisan Credit Card (KCC) coverage and enhancing institutional credit to farmers.
- As per PSL guidelines issued by RBI, Commercial Banks including Regional Rural Banks, Small Finance Banks, Local Area Banks and Primary (Urban) Co-operative Banks (UCBs) other than Salary Earners' Banks are mandated to allocate at least 18% of their Adjusted Net Bank Credit (ANBC) or Credit Equivalent of Off-Balance Sheet Exposures (CEOBSE), whichever is higher, to agriculture, out of which a sub-target of 10  percent  is  prescribed  for  Small  and  Marginal  Farmers  (SMFs).  Further,  it  also prescribes an incentive framework for districts with comparatively lower flow of credit to priority sector which also include credit to agriculture and Small & Marginal farmers and a dis-incentive framework for districts with comparatively higher flow of priority sector credit for more equitable distribution of credit flow to the agricultural sector.
- The limit  for  collateral  free  short-term  agricultural  loans,  including  loans  for  allied activities, has been raised from ₹ 1.60 lakh to ₹ 2.00 lakh per borrower by RBI w.e.f. 01 January 2025.
- Concessional  refinance  is  provided  to  eligible  Rural  Financial  Institutions  (RFIs) through various funds created out of PSL shortfall viz. Short-Term Cooperative Rural Credit  Fund  (STCRCF),  Short-Term  RRB  Credit  Refinance  Fund  (STRRBF)  and Long-Term Rural Credit Fund (LTRCF)
- NABARD implements the following schemes/programmes for supporting SHGs:
- o Training support to SHGs for onboarding onto E-Commerce platforms/ Open Network for Digital Commerce (ONDC)/ social media platforms
- o Skill upgradation for women led microenterprises through 'm-Suwidha'
- o Support  for  training  and  capacity  building  of  microfinance  clients  through Financial Inclusion Fund (FIF) of NABARD
- o Tribal  Development  Programme  wherein  activities  such  as  SHG  formation, health and sanitation camps, training on microenterprise development, etc. are supported.

*****