ANBC full form in the banking industry is “Adjusted Net Bank Credit”. The term is that is used in the banking industry to describe the total amount of credit offered by banks to different sectors, which is adjusted to account for specific variables like the amount of credit granted to the priority sectors, investment that banks make in bonds, and any other specifically formulated adjustments. The notion of ANBC is crucial for evaluating the credit flow that flows into the economy, especially in accordance with the objectives established by central banks for instance, that of the Reserve Bank of India (RBI).
How ANBC Works
Calculating Adjusted Net Banking Credit involves taking into account the total amount of credit that a bank can extend to its customers, and after adjusting the figure to reflect some factors that do not directly affect the productive sectors of the economy. For instance, it does not include the investment in government bonds and other assets with low risk. This results in the ANBC which is the amount of credit banks have provided to the actual economy.
The ANBC is commonly utilized by regulators such as the RBI to track the flow of credit into specific sectors of the economy, like agriculture micro, small and medium-sized enterprises (MSMEs) as well as the weaker segments of society. This allows the authorities to determine how well banks meet objectives set out in various initiatives of the government including those under the Priority Sector Lending (PSL) standards.
Importance of ANBC
- Monitoring Regulatory Compliance: ANBC helps regulators examine the efficiency of credit distribution in specific sectors and to ensure that banks are following the guidelines for credit flow in these areas.
- Economic Growth Adjusting the total amount of credit granted through banks ANBC represents the actual value of credit in the industries that are responsible for economic growth and the creation of jobs.
- Risk management The banks also employ ANBC to evaluate the effectiveness of lending strategies as well as to avoid excessively concentrated credit in high-risk areas.
