The overall credit disbursement by banks to priority sectors including agriculture, MSME and social infrastructure in 2019 was Rs 23,01,567 crore, which rose to Rs 42,73,161 crore in 2024, recording an increase of 85 per cent over the six-year period, Finance Minister Nirmala Sitharaman informed the Lok Sabha on Tuesday.

Within priority sector lending, the overall credit disbursement to the agriculture sector has seen steady and positive growth during this period. In 2019, the total disbursement to the agriculture sector was Rs 8,86,791 crore, and by 2024, it significantly increased to Rs 18,27,666 crore. The data includes credit disbursement towards agriculture infrastructure by banks, she said in a written reply to a question in the Lower House.

The overall credit disbursement to the MSME sector has also increased steadily from Rs 10,99,055 crore in 2019 to Rs 21,73,679 crore in 2024.

As the financial landscape continues to evolve and to enhance the quality of banking services for customers, banks have been collaborating with FinTechs for the provisioning of various services to customers. Some of the major areas where FinTechs are further augmenting banking services include opening savings accounts through e-KYC, V-KYC processes leveraging Artificial Intelligence (AI) technology for face recognition and name match, the Finance Minister said.

Digital loan journeys such as account statement analysis, leveraging alternative data in underwriting for quick credit assessment and real-time decision making, and development of innovative products for customers using APIs of banks are also taking place, she added.

The FM further stated that the Government and RBI have also taken various measures to improve the financial soundness of banks and to address the issues related to credit discipline, responsible lending and improved governance, adoption of technology, recovery and reduction of NPAs.

These measures include the setting up of specialised stressed assets management verticals and branches by public sector banks for effective monitoring and focused follow-up of NPA accounts, which facilitates quicker and improved resolution/ recoveries. The deployment of business correspondents and the adoption of the Feet-on-Street model have also boosted the recovery trajectory of NPAs in banks.

A prudential framework for the resolution of stressed assets was issued by RBI to provide a framework for early recognition, reporting and time-bound resolution of stressed assets, with a build-in incentive to lenders for early adoption of a resolution plan.

Minimum provisioning requirements have been prescribed for both standard and non-performing advances and credit discipline was instilled through the enactment of the Insolvency and Bankruptcy Code, set up of the Central Repository of Information on Large Credits and systematic checking of high-value accounts for wilful default and fraud.

Besides, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 and the Recovery of Debt and Bankruptcy Act have been amended to make it more effective. Institution of comprehensive, automated Early Warning Systems in banks to proactively detect stress and reduce slippage into NPAs, the Finance Minister added.