As per RBI guidelines, it is mandatory for banks (public and private sector) to provide 18% of Adjusted Net Bank Credit (ANBC) to farm sector as direct credit (13.5%) and remaining 4.5 % as indirect credit.

According to sources, only 7 out of 27 Public Sector banks and only 2 out of 26 private sector banks have been able to achieve the lending beyond bench-mark ratio of 18% ANBC to farming sector till November, 2009. The list includes big names like Bank of Baroda, Oriental Bank of Commerce, United Bank of India, Corporation Bank, Union Bank of India, Punjab & Sind Bank and Syndicate Bank.

The seven banks which have successfully achieved the target include Allahabad Bank, Punjab National Bank, Bank of India, Indian Bank, Andhra Bank, Indian Overseas Bank and State Bank of Bikaner and Jaipur.

The first step towards priority sectors (includes agriculture, small scale industries, small business / service enterprises, micro credit, education and home loans) lending was taken in 1968. Initially there were not set targets for the banks with respect to priority sector lending. Later all commercial banks were advised to achieve the target of priority sector lending at 40 per cent of aggregate bank advances by 1985. Specific sub-targets were set agriculture lending and other sectors within priority sectors.