RBI’s new PSL norms to enhance credit penetration

Will help achieve sharper focus on inclusive development

MUMBAI: The Reserve Bank of India (RBI) has comprehensively reviewed the Priority Sector Lending (PSL) Guidelines in order to enable better credit penetration to credit deficient areas, increase lending to small and marginal farmers and weaker sections, and to boost credit to renewable energy, and health infrastructure.

The new move by the RBI is also expected to align it with emerging national priorities and bring sharper focus on inclusive development, after having wide ranging discussions with all stakeholders.

Bank finance to start-ups (up to Rs50 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.

The new PSL guidelines will address regional disparities in the flow of priority sector credit. Higher weightage has been assigned to incremental priority sector credit in ‘identified districts’ where priority sector credit flow is comparatively low.

Under the new guidelines, 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.

Moreover, the 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.

 

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