India revises priority sector lending guidelines

It broadened the purposes for renewable energy loans and revised UCB targets.

The Reserve Bank of India (RBI) has revised guidelines on priority sector lending (PSL), including broadening the purposes for renewable energy loans and revising targets.

It has revised the overall PSL target for urban cooperative banks (UCBs) to 60% of adjusted net bank credit (ANBC) or credit equivalent of off-balance sheet exposures (CEOBSE), whichever is higher.

It has also enhanced several loan limits, including housing loans for enhanced PSL coverage.

RBI also broadened the purposes based on which loans may be classified under ‘Renewable Energy.’

Bank loans up to a limit of ₹35 crore to borrowers for renewable energy-based power generators and for renewable energy based public utilities, viz., street lighting systems, remote village electrification, amongst others, will be eligible for priority sector classification. For individual households, the loan limit will be ₹10 lakh per borrower, the RBI said.

It has also expanded the list of eligible borrowers under the category of ‘Weaker Sections’, along with the removal of the existing cap on loans by UCBs to individual women beneficiaries.

The enhanced coverage of the revised guidelines is expected to facilitate better targeting of bank credit to the priority sectors of the economy, the RBI said in a statement.