Priority Sector are those sectors that the Government

Solution

Priority Sector are those sectors that the Government of India and Reserve Bank of India consider as important for the development of the basic needs of the country and are to be given priority over other sectors. So, under priority sector lending, the banks are mandated to encourage the growth of such sectors with adequate and timely credit. The RBI mandates banks to lend a certain portion of their funds to specified sectors, like agriculture, Micro, Small and Medium Enterprises (MSMEs), export credit, education, housing, social infrastructure, renewable energy among others. All scheduled commercial banks and foreign banks (with a sizable presence in India) are mandated to set aside 40% of their Adjusted Net Bank Credit (ANBC) for lending to these sectors.