- What is priority sector lending:
- Lending by a bank to certain sectors which are identified as "priority sector" by the RBI.
- Priority sectors are those which may not get timely and adequate credit in the financial system.
- Categories under priority sector:
- Micro, small and medium enterprises (MSME)
- Export credit
- Social infrastructure
- Renewable energy
- Targets /Sub-targets for priority sector:
CategoryPortion of Adjusted Net Bank Credit (ANBC) or credit equivalent amount of off-balance sheet exposure, (whichever is higher) allocation for PSL for and Portion of Adjusted Net Bank Credit (ANBC) or credit equivalent amount of off-balance sheet exposure, (whichever is higher) allocation for PSL for foreign banks with Total priority sector40%.
Foreign banks with 20 branches and more have to fulfill the target within 5 years (April 1, 2013 - March 31, 2018) 40% to be achieved in a phased manner by 2020.Agriculture18%.
Within this target of 18%, 8% is allocated to small and marginal farmers.
Foreign banks have to fulfill the target within five years (April 1, 2013 - March 31, 2018).NAMicro enterprises7.5%.The sub-target for micro enterprise for foreign banks would be made applicable post 2018.NAAdvances to weaker sections10%.
Foreign banks have to fulfill the target within five years (April 1, 2013 - March 31, 2018).NA
- Target achievement for foreign banks having less than 20 branches in a phased manner as:
Financial yearThe Total Priority Sector as percentage ofANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher2015-1632%2016-1734%2017-1836%2018-1938%2019-2040%*This additional 2% year must be lent to sectors other than export.
- Categories under "Agriculture":
- Farm credit
- Agriculture infrastructure
- Ancillary activities
- Small/marginal farmers:
- Marginal farmers - having land up to 1 hectare.
- Small farmers - having land of more than 1 hectare and up to 2 hectares.
- Applicable limit and purpose for loans for renewable energy loans:
- Up to Rs. 15 crore to borrowers for purposes like solar based generators, biomass based power generators, wind-mill, micro-hydel plants and for non-conventional energy based public utilities viz. street lighting systems and remote village electrification.
- For individual households, the loan limit is Rs. 10 lakh per borrower.
- Applicable limit and purpose for loans for social infrastructure loans:
- Up to Rs. 5 crore per borrower for building social infrastructure such as schools, health-care facilities, drinking water facilities and sanitation facilities in tier II to tier VI centers.
- Bank credit to Micro Finance Institutions (MFI) extended for on lending to individuals/ SHGs/ JLGs for water and sanitation facilities is also eligible for classification under PSL.
- Loan limit for education: Rs. 10 lakh.
- Loan limit for housing:
- Rs. 28 lakh in metropolitan centers (population >= 10 lakh) provided the overall house cost doesn't exceed Rs. 35 lakh.
- Rs. 20 lakh in other centers provided the overall house cost doesn't exceed Rs. 25 lakh.
- Housing loans to bank employees will not be considered under PSL.
- Weaker sections under priority scetor:
No.Category1.Small and marginal farmers2.Artisans, village and cottage industries where individual credit limits don't exceed Rs. 1 lakh3.Beneficiaries under National Rural Livelihoods Mission (NRLM), National Urban Livelihood Mission (NULM) and Self Employment Scheme for Rehabilitation of Manual Scavengers (SRMS) 4.SC/ST5.SHGs6.Beneficiaries of Differential Rate of Interest (DRI) scheme 7.Distressed farmers indebted to non-institutional lenders8.Distressed persons other than farmers, with loan amount not exceeding Rs. 1 lakh to prepay their debt to non-institutional lenders9.Individual women beneficiaries up to Rs. 1 lakh per borrower10.persons with disabilities11.Overdrafts upto Rs. 5,000 under PMJDY accounts, provided the borrower's household annual income does not exceed Rs. 1 lakh for rural areas and Rs. 1,60,000 for non-rural areas.12.Minority communities
- Is bank credit to Micro Finance Institutions (MFI) treated as PSL: Yes, bank credit to MFIs extended for on-lending to individuals and members of SHGs/JLGs is eligible as PSL under these categories:
- Social infrastructure
- Who decides rate of interest for loans under PSL: Department of Banking Regulation of RBI.