Money & Banking

RBI ups RRBs' priority sector lending target

Rajalakshmi S | | Updated on: Dec 04, 2015

Come January 1, 2016, Regional Rural Banks will be up against a higher priority sector lending (PSL) target.

However, the Reserve Bank of India has liberalised the amount they can lend to segments such as agriculture and also included medium enterprises, social infrastructure and renewable energy under PSL category.

The RBI said 75 per cent of RRBs’ outstanding advances should be for PSL, which also include loans to micro and small enterprises, weaker sections, housing and education, against 60 per cent now. The PSL norms have been revised considering the growing significance of RRBs in pursuit of financial inclusion agenda, it added.

Among the significant revisions in the PSL norms are upping of the limit on loans to individual farmers from Rs 10 lakh to Rs 50 lakh against pledge/ hypothecation of agricultural produce (including warehouse receipts) for a period not exceeding 12 months and doubling the aggregate limit to Rs 2 crore per borrower in the case of loans, among others, to corporate farmers, farmers’ producers organisations/ companies of individual farmers, farmers partnership firms/ co-operatives engaged in agriculture and allied activities.

Shyamal Bhattacharjee, General Secretary, All India Regional Rural Bank Officers' Federation, said RRBs are well placed to achieve the revised PSL targets. Most of the banks are already meeting the extant targets.

In the case of housing loans, the RBI has lowered the quantum of loans that will qualify as PSL. Loans to individuals up to ₹20 lakh (Rs 25 lakh now) for purchase/construction of a dwelling unit per family provided the overall cost of the dwelling unit should not exceed ₹25 lakh will be reckoned as PSL. Housing loans to banks’ own employees will be excluded.

As on March-end 2015, there were 56 RRBs operating in the country, with a network of 20,059 branches covering 644 notified districts in 26 states and the Union Territory of Puducherry.

Published on January 22, 2018

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