February 8, 2019
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Priority Sector Lending targets reinforce weaker sections credit allocation alongside insolvency and governance reforms to strengthen bank recovery mechanisms.
A regulatory target requires banks to allocate a specified proportion of Adjusted Net Bank Credit to lending for weaker sections, subject to quarterly and annual monitoring. A fourfold framework of recognition, resolution, recapitalisation and reforms directs operational measures in public sector banks-digital access, segregation of sanction roles, ring-fencing of cash flows, risk appetite frameworks, stressed asset management verticals, one-time settlement platforms and faster MSME receivables realisation. Statutory changes enable an insolvency resolution framework with creditor-driven management takeover at the outset, bar wilful defaulters from resolution, allow supervisory directions to initiate insolvency proceedings, and strengthen securitisation and recovery procedures.