Dear Sir,
Priority Sector Lending – Investment
by banks in venture capital
Please refer to our Master Circular
on Lending to Priority Sector
dated July 20, 2004 in terms of which investments made by the scheduled
commercial banks in venture capital are reckoned under priority sector lending,
provided the venture capital funds/companies are registered with SEBI.
2. On a review of the recent developments,
including overall credit growth and growth of investment in venture capital
vis-à-vis other sectors, it has been decided that:
i. the fresh investments that
may be made by banks on or after July 1, 2005 in venture capital shall not
be eligible for classification under priority sector lending; and that
ii. the investments, which have
already been made/to be made by banks up to June 30, 2005, in venture capital
shall not be eligible for classification under priority sector lending with
effect from April 1, 2006.
3. The banks are, therefore, advised
to align their priority sector lendings/investments suitably so as to comply
with the above guidelines.
4. Please acknowledge receipt.
Yours faithfully,
(C S Murthy)
Chief General Manager-in-Charge