RBI revised the Priority sector lending guidelines

The Reserve Bank of India has issued a number of guidelines/instructions/directives to banks on Priority Sector Lending. In order to enable the banks to have current instructions at one place, a Master Circular incorporating the existing guidelines/instructions/directives on the subject has been prepared and enclosed.

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Key-Points

The changes include broadening the scope of PSL to include start-ups, increasing the limits for renewable energy, including solar power and compressed biogas plants and increasing the targets for lending to small and marginal farmers and weaker sections under the PSL.

To address the regional disparities in the flow of priority sector credit, an incentive framework has been put in place for banks.

While higher weight will be assigned for incremental priority sector credit in the identified districts where credit flow is comparatively lower, a lower weight would be assigned to incremental priority sector credit in identified districts where the credit flow is comparatively higher.

Banks are required to assign 40% of adjusted net bank credit or credit equivalent amount of off-balance sheet exposure, whichever is higher, to priority sector, including agriculture and micro-enterprises.