It seems that Tamil Nadu is not in any mood to accept the decisions of RBI. Chief Minister Edappadi K Palaniswami has urged Prime Minister Narendra Modi to control upon the Reserve Bank of India (RBI) to quickly rearrange its policy to dis-incentivize good borrowers, who repay on time and restore the earlier weightage system for the free flow of priority sector credit.
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Palanisamy stated in the letter, "It is ‘a short-sighted and counter-productive strategy, for not just the overall economic well-being of the nation, especially when the nation is combating the impact of COVID, but also for the health of the banking system which is struggling with rising non-performing assets." Referring to the recent Master Directions for Priority Sector Lending, issued on September 4, he said it contained ‘a very disturbing and discriminatory provision.’ He added, “Adjustments for weights in PSL Achievement” contained a provision to incentivise flow of priority sector credit to districts with comparatively lower flow of credit with a higher weightage of 125 percent."
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He said, ‘Prima facie this is not objectionable. However, what we find unacceptable is the dis-incentive framework contained in the guideline for districts with comparatively higher flow of priority sector credit with a lower weightage of 90 percent.’ He further stated, 'Since all 32 districts of Tamil Nadu (prior to bifurcation) had been categorized as districts with comparatively high flow of priority sector credit, the whole of Tamil Nadu had been covered in the disincentive framework for priority sector lending.'
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