BANKING

RBI Priority Sector Lending – Targets and Classification Directions 2020

INTRODUCTION

Reserve Bank of India has comprehensively reviewed the Priority Sector Lending (PSL) Guidelines to align it with emerging national priorities and bring a sharper focus on inclusive development, after having wide-ranging discussions with all stakeholders.

Revised PSL guidelines will enable better credit penetration to credit deficient areas; increase lending to small and marginal farmers and weaker sections; boost credit to renewable energy, and health infrastructure.

Bank finance to start-ups (up to ₹50 crore); loans to farmers for installation of solar power plants for solarisation of grid-connected agriculture pumps and loans for setting up Compressed Bio-Gas (CBG) plants have been included as fresh categories eligible for finance under priority sector. Some of the salient features of revised PSL guidelines are:

To address regional disparities in the flow of priority sector credit, higher weightage have been assigned to incremental priority sector credit in ‘identified districts’ where priority sector credit flow is comparatively low.

The targets prescribed for “small and marginal farmers” and “weaker sections” are being increased in a phased manner.

Higher credit limit has been specified for Farmers Producers Organisations (FPOs)/Farmers Producers Companies (FPCs) undertaking farming with assured marketing of their produce at a pre-determined price.

Loan limits for renewable energy have been increased (doubled).

For the improvement of health infrastructure, the credit limit for health infrastructure (including those under ‘Ayushman Bharat’) has been doubled.

Master Directions- Reserve Bank of India (Priority Sector Lending –Targets and Classification) Directions, 2020

In exercise of the powers conferred by Sections 21 and 35A read with Section 56 of the Banking Regulation Act, 1949, the Reserve Bank of India, being satisfied that it is necessary and expedient in the public interest so to do, hereby, issues the Directions hereinafter specified.

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Master Directions- Reserve Bank of India (Priority Sector Lending –Targets and Classification) Directions, 2020

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