RBI revises priority sector lending norms, raises credit limits

As announced by the RBI Governor, startups have been brought under the ambit of priority sector lending. Bank finance of up to Rs 50 crore has been included as a fresh category under priority sector, an RBI statement said.

The RBI statement said that a higher credit limit has been specified for Farmers Producers Organisations (FPOs) or Farmers Producers Companies (FPCs) undertaking farming with assured marketing of their produce at a pre-determined price.

Further, "loan limits for renewable energy have been increased (doubled)" and "credit limit for health infrastructure (including those under 'Ayushman Bharat') has been doubled".

Apart from startups, 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.

"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," it said.

As per the central bank the revised 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 guidelines aim 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 and the the targets prescribed for "small and marginal farmers" and "weaker sections" are being increased in a phased manner, as per the RBI statement.