Credit Disbursement to Priority Sectors Jumps 85% from ₹23 Lakh Crore in 2019 to ₹42.7 Lakh Crore in 2024

The credit disbursement to priority sectors, including agriculture, MSME, and social infrastructure, has grown significantly over the past six years. The total lending to priority sectors increased from ₹23.01 lakh crore in 2019 to ₹42.73 lakh crore in 2024, marking an 85% growth. To enhance financial stability and efficiency, RBI and the government have taken various measures to ensure credit discipline, responsible lending, and technological adoption in the banking sector. Public Sector Banks (PSBs) and financial institutions are increasingly collaborating with FinTechs to improve banking services and facilitate seamless lending.

Key Highlights of Priority Sector Lending and Financial Soundness Measures

1. Growth in Credit Disbursement (2019-2024)

Total Priority Sector Credit

• 2019 – ₹23.01 lakh crore
• 2024 – ₹42.73 lakh crore (85% growth)

Agriculture Sector Credit

• 2019 – ₹8.86 lakh crore
• 2024 – ₹18.27 lakh crore

MSME Sector Credit

• 2019 – ₹10.99 lakh crore
• 2024 – ₹21.73 lakh crore

2. Technology-Driven Banking Enhancements

• AI-powered e-KYC & V-KYC: Face recognition & name matching for customer verification.
• Digital Loan Processing: Faster credit assessment using alternate data.
• API-based Banking Products: Innovative financial products for customer convenience.

3. RBI’s Supervisory Framework for Financial Stability

• Regulatory guidelines compliance: Examined during supervisory assessments.
• Proactive risk management: Identifies vulnerable sectors, borrowers & financial institutions.
• Proportional regulations: Tailored to risk profiles of banks & NBFCs.

4. Government & RBI Measures for Banking Sector Soundness

A. Strengthening NPA Management & Recovery

• Specialized stressed asset management verticals in PSBs for focused NPA resolution.
• Business correspondents & feet-on-street model for better loan recoveries.
• Prudential Framework for Stressed Assets: Encourages early resolution planning.
• Minimum provisioning requirements for standard & non-performing assets.

B. Improving Credit Discipline & Fraud Prevention

• Insolvency & Bankruptcy Code (IBC): Strengthened framework for loan recovery.
• Central Repository of Information on Large Credits (CRILC): Tracks high-value accounts.
• SARFAESI Act & Debt Recovery Amendments: Enhanced legal tools for asset recovery.
• Automated Early Warning Systems: Detects stress early & prevents NPA slippage.

C. Structural Reforms in Banking Sector

EASE (Enhanced Access & Service Excellence) Reforms,

• Governance, risk management & prudential lending improvements.
• Data-driven banking & technology adoption.
• Bank Mergers: Improved efficiency through economies of scale.