P.K. Gupta in Calcutta on Friday. A Telegraph picture

Calcutta, June 15: The Reserve Bank’s revised guidelines for priority sector lending has made it difficult for banks to meet the loan target for agriculture and allied services.

Domestic commercial banks are required to lend at least 40 per cent of their adjusted net bank credit (ANBC) to priority sectors that include agriculture and allied services, small-scale industries, retail housing loans of up to Rs 20 lakh, micro credit, education loans and retail trade.

Banks are required to lend 18 per cent of their ANBC to agricultural and allied activities. Agricultural lending is again classified as direct and indirect financing. Moreover, indirect financing cannot be more than one-fourth of direct financing.

In its revised guidelines, the RBI has stated that loans of up to an aggregate amount of Rs 1 crore per borrower, granted to companies, institutions and partnership firms for agriculture and allied activities, will be considered as direct lending.

United Bank of India (UBI) has lent Rs 400 crore to 100 borrowers from the tea sector. “About 70 per cent of these accounts are over Rs 1 crore. We will be affected by the new priority sector lending norms,” said P.K. Gupta, chairman and managing director of UBI.

All banks, including the UBI, have approached the RBI through the Indian Banks’ Association to relax this clause.