RBI Enhances Priority Sector Lending Norms For Banks

The Reserve Bank of India has enhanced guidelines for priority sector lending, which is expected to facilitate better targeting of bank credit to the priority sectors of the economy, the central bank said in a press release.

The central bank has increased several loan limits, including housing loans for enhanced PSL coverage. It has also expanded the purposes based on which loans may be classified under 'renewable energy'.

It has also decreased the overall PSL target for urban co-operative banks to 60% of adjusted net bank credit or credit equivalent of off-balance sheet exposures or whichever is higher from 65%.

The central bank has also expanded the list of eligible borrowers under the category of weaker sections and has removed the existing cap on loans by UCBs to individual women beneficiaries.

These guidelines have come after a comprehensive review of existing provisions, taking into account feedback from stakeholders, and will come into effect from April 01.

PSL norms basically mandate banks to allocate a certain percentage of their credit to specific sectors that are crucial for economic development, including agriculture, MSMEs, education, housing, and social infrastructure.