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The Reserve Bank of India (RBI) on Thursday said it will put in place an incentive framework for banks to address the regional disparities in the flow of priority sector credit.
Further, the central bank will also grant priority sector lending (PSL) status to start-ups; and the limits for renewable energy, including solar power and compressed bio-gas plants, are being increased.
The RBI said while higher weightage will be assigned for incremental priority sector credit in the identified districts having lower credit flow, a lower weightage would be assigned in identified districts where the credit flow is comparatively higher.
Banks’ lending to sectors such as agriculture; micro, small and medium enterprises; export credit; education; housing; social infrastructure; renewable energy, among others are classified as PSL.
The total priority sector lending target for domestic scheduled commercial banks (exculding regional rural banks and small finance banks) and foreign banks is 40 per cent of their Adjusted Net Bank Credit or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher.
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