Banks Achieve Priority Sector Lending Targets in FY25, Credit to MSMEs and Agriculture Expands

The Reserve Bank of India has confirmed that banks successfully met their priority sector lending targets for the financial year 2024-25, with notable growth in credit to micro, small, and medium enterprises as well as the agricultural sector. This achievement underscores the banking sector’s commitment to financial inclusion and economic development.  

 

Priority Sector Lending Performance  

- Scheduled Commercial Banks collectively met the mandated 40 percent priority sector lending threshold, with total lending reaching 43.1 percent of adjusted net bank credit or credit equivalent of off-balance sheet exposure.  

- Public sector banks led the effort with a 42.4 percent share, followed by private banks at 44.3 percent and foreign banks at 42 percent.  

- The overall priority sector lending achievement rose to 65.7 percent in FY25, compared to 58.5 percent in the previous year.  

 

Credit Growth in MSMEs and Agriculture  

- Lending to micro, small, and medium enterprises grew by 14.8 percent year-on-year, reflecting continued policy support for business expansion.  

- The number of MSME loan accounts stood at 245.3 lakh, with a total outstanding amount of 31.3 lakh crore rupees, up from 27.3 lakh crore rupees in FY24.  

- Agricultural credit saw a mixed trend, with a decline in operative Kisan Credit Cards by 2.7 percent, but an increase in the outstanding amount by 4.5 percent.  

- The RBI enhanced the limit for collateral-free agricultural loans from 1.6 lakh rupees to 2 lakh rupees per borrower in December 2024, supporting small and marginal farmers.  

 

Regulatory Actions and Future Outlook  

- The RBI imposed penalties totaling 54.78 crore rupees on 353 regulated entities in FY25, including cooperative banks, private banks, public sector banks, NBFCs, and housing finance companies.  

- The banking sector’s sustained efforts in priority sector lending highlight its role in driving financial inclusion and supporting economic growth.  

 

Source: Economic Times, Reserve Bank of India.