RBI Releases Revised Priority Sector Lending Guidelines

Last updated: 07 September 2020

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The Reserve Bank of India has updated its Priority Sector Lending (PSL) Guidelines to better align with national goals and promote inclusive growth. These revisions aim to improve credit access in underserved areas, increase lending to small farmers and vulnerable groups, and boost investment in renewable energy and health infrastructure. Key changes include adding bank finance for start-ups and compressed biogas plants, and increasing loan limits for renewable energy and health facilities.

Date : Sep 04, 2020

RBI Releases Revised Priority Sector Lending Guidelines

Reserve Bank of India has comprehensively reviewed the Priority Sector Lending (PSL) Guidelines to align it with emerging national priorities and bring sharper focus on inclusive development, after having wide ranging discussions with all stakeholders.

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.

Bank finance to start-ups (up to ₹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. Some of the salient features of revised PSL guidelines are:

1. 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.

2. The targets prescribed for “small and marginal farmers” and “weaker sections” are being increased in a phased manner.

3. 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.

4. Loan limits for renewable energy have been increased (doubled).

5. For improvement of health infrastructure, credit limit for health infrastructure (including those under ‘Ayushman Bharat’) has been doubled.

(Yogesh Dayal)
Chief General Manager

Press Release No. 2020-2021/284

FAQ :

The revised guidelines aim to achieve better credit penetration in credit-deficient areas, increase lending to small and marginal farmers and weaker sections, and boost credit for renewable energy and health infrastructure, aligning with emerging national priorities.

Bank finance for start-ups (up to ₹50 crore), loans to farmers for installing solar power plants for agricultural pumps, and loans for setting up Compressed Bio Gas (CBG) plants are now eligible for finance under priority sector.

Higher weightage will be assigned to incremental priority sector credit in identified districts where the flow of such credit is comparatively low, helping to address regional disparities.

Yes, loan limits for renewable energy have been doubled, and the credit limit for health infrastructure, including those under 'Ayushman Bharat', has also been doubled.

The targets prescribed for 'small and marginal farmers' and 'weaker sections' are being increased in a phased manner. Additionally, higher credit limits are specified for Farmers Producers Organisations (FPOs)/Farmers Producers Companies (FPCs) involved in farming with assured marketing.