Money & Banking

Bank lending to NBFCs under PSL extended

Our Bureau. Mumbai | Updated on April 07, 2021

Bank lending to non-banking finance companies/NBFCs (other than microfinance institutions) for on-lending to agriculture, MSME and housing will continue to be classified as priority sector lending (PSL) for six more months, according to the Reserve Bank of India.

The dispensation, whereby bank lending to NBFCs for on-lending to specified sectors was recognised as PSL, was available from August 13, 2019 till March 31, 2021.

But now it has been further extended for another six months, up to September 30, the RBI said in its latest Statement on Developmental and Regulatory Policies.

With a view to encouraging farm credit to individual farmers against pledge/ hypothecation of agricultural produce, the RBI has enhanced the loan limit under PSL from ₹50 lakh to ₹75 lakh per borrower.

This enhanced limit is against the pledge/ hypothecation of agricultural produce backed by Negotiable Warehouse Receipts (NWRs)/electronic-NWRs (e-NWRs) issued by warehouses registered with the Warehousing Development and Regulatory Authority (WDRA).

For other Warehouse Receipts, the loan limit for classification under PSL will continue to be ₹50 lakh per borrower.

Published on April 07, 2021

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