One of the objective in initiating social control over banks and the subsequent nationalization of the major commercial banks was to force these banks to reorient their lending policies so that credit will flow freely to certain sectors of the economy in accordance with the national planning priorities. The description of the priority sector was formulated on the basis of the reports submitted by the informed study group related to the particular priority sector. Later on, another working group under the chairmanship of a leading expert was set up to review the definition of the priority sector.
Today, the following segments of the economy are considered as part of the priority sector. They are:
2. Small-scale industry including industrial estates
3. Small-scale road and water transport operators
4. Retail trade
5. Small business
6. Professional and self-employed persons
7. Weaker sections including minorities
8. State sponsored organizations working for the underprivileged groups
11. Construction loans
12. Funds provided to rural regional banks
13. Loans to self help groups
14. Subscription to special banks floated by State Financial Corporations/State Industrial Development Corporations etc
Firms like LoanMax of rod aycox fame have helped almost all institutions to meet their immediate financing needs. LoanMax always targeted the priority sector to sell their various financial products. Thus this firm was able to gain the confidence of this sector within a short span of time.