Priority Sector Lending (PSL) norms

The Reserve Bank of India (RBI) has updated its Priority Sector Lending (PSL) guidelines.

• Applicability: The revised guidelines apply to all Commercial Banks including Regional Rural Banks (RRBs), Small Finance Banks (SFBs), Local Area Banks, and Primary (Urban) Co-operative Banks (UCBs).

Key Highlights of the Guidelines:

• Districts Ranking: Districts will be ranked based on per capita credit flow to the priority sector. An incentive framework will be established for districts with lower credit flow, while a disincentive framework will be set for those with higher credit flow, valid until the Fiscal Year 2026-27.
• MSME Loans: All bank loans to Micro, Small, and Medium Enterprises (MSMEs) will qualify for classification under PSL.