s s mundra : priority sector lending - status, issues and future agenda inaugural address by mr s s mundra, deputy governor of the reserve bank of india, at the " conference on credit flow to priority sector - policy and implementation ", college of agricultural banking, reserve bank of india, pune, 27 june 2017. * * * 1. colleagues from college of agricultural banking ( cab ) ; in - charges of priority sector lending in various banks assembled here and my colleagues from various regional offices of rbi who have joined over video conference - a very good morning to all of you! i consider hosting of this conference on credit flow to priority sector by the cab, a very timely initiative indeed. such conferences are extremely important as they provide a platform for exchange of views and feedback that serves as inputs for policy formulation. i believe that policies framed in isolation will look good on paper but would not serve much purpose when implemented on ground. introduction 2. the overarching philosophy behind prescribing the priority sector target for banks is to enable sections of society, which though credit worthy, are unable to receive credit from the formal system, either in adequate measure or in a timely manner. there are economic reasons why some sectors / borrowers do not receive adequate finance. at any given point of time, the lendable resources at institutions are limited and there is always a trade - off between how much time and effort can be put in and what kind of topline and bottom line the new businesses would generate. given this sort of business dynamics, it is possible that the sectors which rightly deserve bank credit get excluded. this is precisely the motivation behind institution of priority sector lending norms. these guidelines are revised from time to time keeping in view the developments in the economy. priority sector lending ( psl ) : a business case 3. before i come to specifics, let me touch upon certain policy and strategy issues. the psl guidelines have been in existence for a long time now - there are targets, sub targets, but sadly most of the time, these norms are viewed more as a matter of compliance. the first and the most important message which i would like the psl chiefs of the banks present here to carry to your senior management and the board of directors is that lending to priority sector is good business for all the right and justifiable reasons. perhaps, it would be possible for you to put across your arguments more persuasively now than ever before. i say so because

are operational even without waiting for acquiring ‘ scheduled ’ status. more than 15 % of trade happening under pslc is by sfbs, which is a healthy trend. from the current year itself, the sfbs have been allowed to participate in slbc meetings but there is no requirement for them in the annual credit plan until april 2018. for sfbs, payment banks as their bcs could emerge as a good combination as many payment banks have wide last - mile reach. conclusion 22. i would like to conclude here just by mentioning that all of you as in - charges of priority sector lending in your respective banks can make a difference in a large constituency, which is priority sector. each credit extended by banks to priority sector can be a life changing event and the priority sector credit as a whole can change the lives of a multitude of people of this country. you have to consider your role as that of a change agent. i urge all of you to schedule a discussion with your top management, convey to them the take - away from this conference and then take it to your board. i wish you all the best and thank cab for inviting me to address this gathering. 7 / 7 bis central bankers'speeches