Private sector lender, YES Bank aims to see its priority sector loans at zero default rate and also expects to maintain positive margins.

RBI mandates that all banks need to contribute at least 40% credit towards priority sector which includes agriculture, MSMEs, education and housing. However, these sectors carry huge risk of defaults.

According to Somak Ghosh, group president (corporate finance and development banking), YES Bank has always crossed the mark set by RBI for priority sector lending in the past four years. The non performing assets (NPA) level has also been zero.

“We have one of the lowest NPA levels in the industry. In development banking or priority sector lending, our NPAs are zero and we expect to remain at that. Further, we will continue to make modest money (in the development banking business),’’ Ghosh said.

The bank has a net interest margin (NIM) of 3.2%. NIM of the bank in priority sector is 1.5%.

“We have followed a partner-led model which has two implications — it results in zero defaults and we are able to keep our costs low,’’ he said.

“It’s just not about meeting the priority sector target or the regulatory norms. Close to 80 per cent of our rural households have no access to banking services. There is a huge potential in offering financial services to these under-banked households,’’ he added.