Lending to small and marginal farmers and weaker sections is expected to be a challenge, especially for private banks in the next fiscal owing to a lack of growth in disbursements in the microfinance business which generates this form of credit, according to a report from Kotak Institutional Equities. 

“Banks would also continue to struggle to comply with higher lending norms for small and marginal farmers and weaker sections. The ability to meet these goals has been a challenge for banks,” Kotak Institutional Equities said in the report. 

The comments assume significance after the Reserve Bank of India (RBI) revised priority sector lending requirements

Similar increases in lending targets were effected for loans to weaker sections too. Although there were no major changes in terms of lending targets, the size of credit has been increased. For artisans, village and cottage industries, individual credit limits should not exceed ₹2 lakh against ₹1 lakh earlier.