RBI - Lending by banks to NBFCs for On-Lending

Reserve bank of India

RBI/2021-22/15
FIDD.CO.Plan.BC.No.8/04.09.01/2021-22

April 7, 2021

The Chairman/ Managing Director
Chief Executive Officer
All Scheduled Commercial Banks
(Excluding Regional Rural Banks, Small Finance Banks, Urban Co-operative Banks and Local Area Banks)

Dear Sir/Madam

Priority Sector Lending (PSL) – Lending by banks to NBFCs for On-Lending

Please refer to our Circular No. RBI/2019-20/179 FIDD.CO.Plan.BC.No.19/04.09.01/2019-20 dated March 23, 2020 advising, inter alia, that the bank loans to registered NBFCs (other than MFIs) for on-lending will be eligible for classification as priority sector under Agriculture and Micro & Small Enterprises up to March 31, 2021 and will be reviewed thereafter.

2. As announced in the Statement on Developmental and Regulatory Policies dated April 7, 2021, with a view to ensure continued availability of credit to these sectors to aid faster economic recovery, it has been decided to extend the PSL classification for lending by banks to NBFCs for on-lending by six months i.e. up to September 30, 2021. However, bank loans to HFCs for on-lending for the purpose of housing, as prescribed in para 23 of our Master Direction on PSL dated September 4, 2020, will continue on an on-going basis. Further, existing loans disbursed under the on-lending model will continue to be classified under Priority Sector till the date of repayment/maturity.

3. All other guidelines as issued vide circulars FIDD.CO.Plan.BC.7/04.09.01/2019-20 dated August 13, 2019, FIDD.CO.Plan.BC.No.19/04.09.01/2019-20 dated March 23, 2020 and Master Directions on PSL dated September 4, 2020 will continue to apply.

Yours faithfully

(Sonali Sen Gupta)
Chief General Manager-in-Charge