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Monday, September 21, 2020

RBI expands priority sector lending categories; includes start-ups

The Priority Sector Lending (PSL) guidelines have been comprehensively reviewed and revised to align it with emerging national priorities and bring sharper focus on inclusive development, after having wide ranging discussions with all stakeholders, the RBI said on Friday.

By: PTI | Mumbai | September 4, 2020 5:23:48 pm
rbi, rbi news, rbi updates, rbi reserve bank of india, rbi repo rate, rbi monetary policy committeeThe Reserve Bank of India (RBI) logo is displayed on a gate outside the central bank's regional headquarters in New Delhi, India, on Monday, July 8, 2019. (Photographer: T. Narayan/Bloomberg)

The Reserve Bank has expanded the scope of priority sector lending to include start-ups funding up to Rs 50 crore, and loans to farmers for installation of solar plants and compressed biogas plants.

The Priority Sector Lending (PSL) guidelines have been comprehensively reviewed and revised to align it with emerging national priorities and bring sharper focus on inclusive development, after having wide ranging discussions with all stakeholders, the RBI said on Friday.

“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,” the RBI said in a release.

The PSL will include bank finance to start-ups for up to Rs 50 crore.

According to the release, 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.

The revised guidelines, the RBI said, also seeks to address the issues concerning regional disparities in the flow of priority sector credit.

Further, the central bank said that higher weightage have been assigned to incremental priority sector credit in ‘identified districts’ where priority sector credit flow is comparatively low.

The targets prescribed for “small and marginal farmers” and “weaker sections” will be increased in a phased manner, the RBI said, adding that “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”.

Under the new norms, the loan limits for renewable energy, health infrastructure, including the projects under ‘Ayushman Bharat’, have been doubled.

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