India's cenbank has revised its priority sector lending guidelines

The Reserve Bank of India issued revised guidelines for priority sector lending on Monday, in an effort to increase the loan limit and expand PSL coverage across all sectors.

The RBI announced that the updated rules would take effect on April 1. They were based on a thorough review of current provisions and feedback from stakeholders.

To increase the coverage of PSL, the central bank will implement changes that include an increase in loan limits for multiple categories including housing.

The revised framework expands the scope for loans that are classified as renewable energy.

The RBI will also raise the PSL target of urban cooperative banks from 50% to 60% of net adjusted bank credit or the credit equivalent of off balance sheet exposures, whichever is greater, in order to increase credit to key segments of the economic system.

The RBI has also expanded the list eligible borrowers in the category of 'weaker section'. The RBI also removed the existing limit on loans made by urban cooperatives to women beneficiaries.

The central bank stated that "the enhanced coverage of revised guidelines will facilitate better targeting of banking credit to priority sectors of economy." (Reporting and editing by Maju Sam; Ashna Teresa Brito)

(source: Reuters)