Context:
RBI revises Priority Sector Lending Guidelines effective from 1st April 2025.
Revised Guidelines (as per Banking Regulation Act, 1949):
- Priority Sector Lending (PSL) Revisions for Primary (Urban) Co-operative Bank (UCBs) –
- Total Priority Sector – Target increased to 60%.
- Sub-target for Micro Enterprises – 7.5%.
- Advances to Weaker Sections – Raised to 12%.
- Expanded Category of ‘Weaker Sections’ – Now includes transgenders, along with earlier categories of –
- Small and Marginal Farmers.
- Distressed farmers indebted to non-institutional lenders.
- Artisans, SHG members, and JLG members.
- Scheduled Castes, Scheduled Tribes, Persons with Disabilities, Minority communities (as notified by the Government of India).
- Enhancement of Loan Limits –
- Education – Loans up to ₹25 lakh for individuals (including vocational courses).
- Social Infrastructure – Loans up to ₹8 crore per borrower for projects like schools, drinking water facilities, etc.
- Other Sectors – Includes enhancements in Housing Loans, Agriculture Loans, etc.
- Renewable Energy Focus –
- Loan limit set at ₹10 lakh per individual household.
- Up to ₹35 crore for renewable energy power generators and public utilities like street lighting, remote village electrification.
Targets for Priority Sector:
| Category | Total Priority Sector (as a % of Adjusted Net Bank Credit or Credit Equivalent of Off-Balance Sheet Exposures, whichever is higher) | Agriculture | Micro Enterprises | Weaker Sections |
| Domestic Commercial Banks & Foreign Banks (20 branches and above) | 40% | 18% | 7.5% | 12% |
| Foreign Banks (Less than 20 branches) | 40% (up to 32% in form of Export Credit) | NA | NA | NA |
| Regional Rural Banks (RRBs) | 75% | 18% | 7.5% | 15% |
| Small Finance Banks | 75% | 18% | 7.5% | 12% |
Source: TOI
Previous Year Question
Consider the following statements with reference to India:
1. According to the ‘Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, the ‘medium enterprises’ are those with investments in plant and machinery between Rs. 15 crores and Rs. 25 crores.
2. All bank loans to the Micro, Small and Medium Enterprises qualify under the priority sector.
Which of the statements given above is/are correct?
[UPSC Civil Services Exam – 2023 Prelims]
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer: (b)
Explanation:
Medium Enterprise: An enterprise where the investment in plant and machinery or equipment does not exceed Rs. 50 crores, and turnover does not exceed Rs. 250 crores. Hence, Statement 1 is not correct.
The areas identified under Priority Sector Lending (PSL) in India by the Reserve Bank of India include agriculture, micro, small and medium enterprises (MSMEs), export credit, education, housing, social infrastructure, renewable energy, and weaker sections of society. Hence, Statement 2 is correct.