NEW DELHI: The Reserve Bank of India (RBI) on Friday said it has revised priority sector lending (PSL) guidelines to include entrepreneurship and renewable resources, in line with emerging national priorities.
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 BioGas plants have been included as fresh categories eligible for finance under priority sector.
“Revised PSL guidelines will enable better credit penetration to credit deficient areas; increase the lending to small and marginal farmers and weaker sections; boost credit to renewable energy, and health infrastructure,” the central bank said in a statement.
The new guidelines are applicable to all commercial banks including regional rural banks, small finance banks, local area banks and primary (urban) co-operative banks other than salary earners’ banks. PSL guidelines were last reviewed for commercial banks in April 2015 and for urban co-operative banks in May 2018.
RBIs said the new 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, it added.
The targets prescribed for “small and marginal farmers” and “weaker sections” are being increased in a phased manner, the government banker added.
For this review, RBI took into account the recommendations made by the UK Sinha-led expert committee on Micro, Small and Medium Enterprises and the MK Jain led Internal Working Group to Review Agriculture Credit apart from discussions with all stakeholders.