ANBC is a measure used by the Reserve Bank of India (RBI) to determine how much money banks are lending. It is important because it helps set targets for priority sector lending which includes the loans given to sectors like agriculture, small businesses, and weaker sections. What is Priority Sector Lending (PSL)? click here

In simple terms, ANBC is the total loan amount given by a bank after making certain adjustments. It includes:

1. Total Loans Given by the Bank – All the money banks have lent to businesses, individuals, and other borrowers.
2. Investments in Non-SLR Bonds – Banks also invest in certain bonds, which are counted as part of their credit.
3. Exclusions & Adjustments – Some loans and investments are excluded or adjusted based on RBI guidelines.

RBI uses ANBC to set targets for how much banks should lend to priority sectors. For example, a bank must lend at least 40% of its ANBC to sectors like agriculture and small businesses.

Significance of Adjusted Net Bank Credit (ANBC)

1. Priority Sector Lending (PSL) Compliance – RBI uses ANBC to set minimum lending targets for banks in sectors like agriculture, MSMEs, and weaker sections, ensuring financial inclusion.
2. Encourages Productive Lending – By focusing on net credit after adjustments, ANBC pushes banks to lend actively instead of relying too much on investments.
3. Monetary Policy Implementation – RBI monitors ANBC to assess liquidity and credit growth in the economy, helping in policy decisions.
4. Ensures a Balanced Loan Portfolio – It prevents banks from focusing only on high-profit sectors, ensuring credit reaches areas crucial for economic growth.
5. Encourages Responsible Banking – Banks need to maintain a balance between lending and investments, ensuring financial stability.

What are the Challenges in Implementing ANBC?

1. Compliance Pressure on Banks – Meeting PSL targets based on ANBC can be difficult, especially for private and foreign banks with limited rural presence.
2. Lack of Credit Demand in Some Sectors – Some priority sectors may not have enough borrowers or viable projects, making it harder for banks to meet targets.
3. Risk of NPAs (Non-Performing Assets) – Banks may be forced to lend in high-risk areas, increasing the chances of loan defaults.
4. Impact of Market Fluctuations – Investments in bonds (part of ANBC) can be affected by interest rate changes, altering credit availability.
5. Complex Calculation & Adjustments – The adjustments required for ANBC calculations can be complicated, leading to compliance issues.

Example of ANBC in Action

Let’s say Bank A has the following financials:

• Total Loans Given: ₹1,00,000 crore

• Investments in Non-SLR Bonds: ₹10,000 crore

• Exclusions & Adjustments as per RBI Rules: ₹5,000 crore

Step-by-Step Calculation of ANBC

ANBC = (Total Loans + Non-SLR Bond Investments) – Adjustments

= (₹1,00,000 Cr + ₹10,000 Cr) – ₹5,000 Cr

= ₹1,05,000 crore

RBI requires 40% of ANBC to be lent to priority sectors.

40% of ₹1,05,000 crore = ₹42,000 crore. It means that the Bank A must lend at least ₹42,000 crore to agriculture, MSMEs, and weaker sections.

Impact on the Economy

1. Ensures credit flows into productive sectors like farming and small businesses.
2. Helps in rural development and employment generation.
3. Prevents banks from focusing only on large corporate loans or investments.
4. This is why RBI uses ANBC—to push banks toward balanced, inclusive growth rather than just profit-driven lending.