Revised PSL guideline
- September 4, 2020
- Posted by: OptimizeIAS Team
- Category: DPN Topics
Reserve Bank of India (RBI) has comprehensively reviewed the Priority Sector Lending (PSL) guidelines to enable better credit penetration to credit deficient areas and increase the lending to small and marginal farmers and weaker sections.
- The revised PSL norms are aimed at aligning the same with “emerging national priorities and bring sharper focus on inclusive development.
- The RBI said bank finance to start-ups up to Rs 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.
- 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 improvement of health infrastructure, credit limit for health infrastructure (including those under ‘Ayushman Bharat’) has been doubled.
- Priority sector lending refers to those sectors or areas of the economy which may not get timely and adequate credit.
- The RBI requires Indian banks to allocate certain portion of their overall lending for sectors mentioned under PSL. These areas of focus for PSL include Agriculture, Micro, Small and Medium Enterprises (MSME), Export Credit, Education, Housing, Social Infrastructure, Renewable Energy.
- Reserve Bank of India has, from time to time, issued a number of guidelines to banks on Priority Sector Lending. These were last reviewed in April 2015 and for urban and cooperative banks in May 2018.
- PSL guidelines are applicable to all domestic scheduled commercial banks (excluding Regional Rural Banks and Small Finance Banks) and foreign banks with 20 branches and above.