The Reserve Bank of India (RBI) has released a comprehensive revision to its Priority Sector Lending (PSL) guidelines, with changes set to take effect from April 1, 2025. These new measures are aimed at refining the allocation of bank credit to economically and socially significant sectors of the Indian economy.
According to the central bank, the enhanced coverage is designed to better target bank lending to priority sectors, addressing both developmental needs and financial inclusivity.
Let’s explore the key revisions and their implications:
To make housing finance more accessible and inclusive, the RBI has raised the limits for loans eligible under PSL:
Additionally, the maximum cost of dwelling units has been specified to ensure affordability and prevent misuse of the PSL benefits.
Recognising the importance of clean energy, the RBI has expanded the definition and loan limits for renewable energy projects:
This move is expected to catalyse investments in sustainable infrastructure and support India’s renewable energy goals.
Urban Cooperative Banks will now be subject to an updated PSL target:
This revision aligns UCBs more closely with commercial banks in their lending obligations to priority sectors.
The definition of ‘Weaker Sections’ has been broadened to allow a wider range of beneficiaries access to credit. Notably:
These measures are in line with the broader aim of fostering equitable credit distribution across underserved demographics.
The RBI’s revised guidelines reaffirm its commitment to sectors that are vital to national development. The PSL framework continues to cover:
The updated norms provide a more detailed framework and refined thresholds for each segment, ensuring targeted delivery of credit.
These revised PSL guidelines mark a significant step by the RBI to recalibrate credit flow in accordance with changing economic priorities and societal needs. By refining limits and expanding eligible categories, the central bank aims to enhance both the quality and reach of institutional lending across India’s diverse economy.
While these norms are set for implementation in April 2025, their announcement gives time for financial institutions to align their internal policies and practices accordingly.
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Published on: Mar 25, 2025, 2:21 PM IST
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