Priority Sector Lending Guidelines
- Posted By
8th Aug, 2020
- Under Priority Sector Lending (PSL) guidelines, banks have to set aside a specific portion of bank lending to sectors deemed important by the central bank.
- The following are the categories listed by RBI under PSL
- Micro, Small and Medium Enterprises
- Export Credit
- Social Infrastructure
- Renewable Energy
- All scheduled commercial banks and foreign banks with a sizeable presence in India are mandated to set aside 40% of their Adjusted Net Bank Credit (ANDC) for lending to these sectors.
- RBI has recently assigned PSL status to India’s start-up sector.
- Start-ups were considered under the MSME category and were required to show three years of profitability
- RBI also recently increased the limits for renewable energy, including solar power and compressed bio-gas plants.
- Higher weighting will be assigned to incremental priority sector credit in identified districts where credit flow is comparatively lower.
- Whereas a lower weighting will be assigned in case of a comparatively higher credit flow.