Nair Committee Report on Priority Sector Lending

The Reserve Bank India had constituted the Committee un­der the chairmanship of M. V. Nair on August 25, 2011 pur­suant to the announcement made in the Monetary Policy Statement 2011-12.

The Major Recommendations of the Nair Committee are:
  • The sector ‘agriculture and allied activities’ maybe a com­posite sector within priority sector, by doing away with dis­tinction between direct and indirect agriculture. The targets for agriculture and allied activities may be 18 per cent of Adjusted Net Bank Credit (ANBC) or credit equivalent of off-balance sheet exposure (CEOBE), whichever is higher.
  • A sub target for small and marginal farmers within agricul­ture and allied activities is recommended, equivalent to 9 percent of ANBC or CEOBE, whichever is higher to be achieved in stages by 2015-16.
  • The MSE sector may continue to be under priority sector. Within MSE sector, a sub target for micro enterprises is recommended equivalent to 7 percent of ANBC or CEOE, whichever is higher to be achieved in stages by 2013-14.
  • The priority sector targets for foreign banks may be increased to 40 percent of ANBC or CEOBE, whichever is higher with sub-target of 15 percent for exports and 15 percent for MSE sector, within which 7 percent may be earmarked for micro enterprises.
  • Bank loans to non-bank financial intermediaries for on lending to specified segments may be allowed to be reckoned for classification under priority sector, up to a minimum of 5 percent of ANBC or CEOBE, whichever is higher, subject to certain due diligence and documentation standards.