Bank of baroda

Directed Lending
RBI guidelines require banks to lend at least 40.0% of their net bank credit to certain specified sectors called priority
sectors. Priority sectors include the agricultural sector, SSIs, food and agri-based industries (with investments in plant and
machinery up to Rs. 50 million), small business, self-employed and professional individuals, housing finance up to certain
limits and certain other sectors. Out of the 40.0%, banks are required to lend a minimum of 18.0% of their net bank credit
to the agriculture sector.
We are required to comply with the priority sector lending requirements on the last reporting Friday (alternate Fridays are
designated by RBI as “reporting Fridays”) of each fiscal year. Any shortfall in the amount required to be lent to priority
sectors may be required to be deposited with Government sponsored development banks such as the National Bank for
Agriculture and Rural Development and the Small Industries Development Bank of India. These deposits have a maturity
of up to seven years but are relatively low yielding.
We report our priority sector loans to RBI on a quarterly basis. The loans reported are as of the last reporting Friday of
the quarter. As of September 30, 2005, which was the last reporting Friday for the half year ended September 30, 2005,
our priority sector loans were Rs. 153,065 million, constituting 40.87% of our net bank credit against the requirement of
40.0%. The agriculture sector constituted 14.96% of our priority sector credit and SSIs constituted 10.81% of our priority
sector credit as of September 30, 2005.
The following table presents data on our outstanding priority sector lending, including as a percentage of our total net
bank credit, as of the last reporting Friday of the months indicated.
(In Rs. million, except for percentages)
March 2004
March 2005
September 2005