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Govt accords priority sector status to food processing units

The government today brought the food processing units under the definition of priority sector for bank lending.

The decision would enable the food processing industrial units to avail of priority bank credit for new projects, expansion and modernisation.

The Reserve Bank of India has issued necessary orders to all scheduled commercial banks in this regard.

The decision was based on a demand from the ministry of food processing industries for categorisation of all agro-based industries under priority lending sector by banks and financial institutions.

With this, the food processing industry has been brought on a par with sectors like agriculture, tourism and information technology.

About 40 per cent of the total lending by banks has to be earmarked for priority sectors. The requirement of margin money of the promoters would also be smaller compared to the non priority sectors.

The flow of credit to the priority lending sectors would be closely monitored as all the banks are required to separately report the credit dispensed under the category.

UNI

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