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Come January 1, 2016, and regional rural banks (RRBs) will be up against a higher priority sector lending (PSL) target.
However, the Reserve Bank of India has liberalised the amounts they can lend to segments, such as agriculture and also included medium enterprises, social infrastructure and renewable energy under the PSL category. The RBI said 75 per cent of RRBs’ outstanding advances — as against 60 per cent now — should be for PSL, which also includes loans to micro and small enterprises, weaker sections, housing and education. The PSL norms have been revised considering the growing significance of RRBs in bringing about financial inclusion, it added.
Among significant revisions in the PSL norms are: upping of the limit on loans to individual farmers to ₹50 lakh from ₹10 lakh against pledging/hypothecation of agricultural produce (including warehouse receipts) for a period not exceeding 12 months, and doubling the aggregate limit to ₹2 crore per borrower in the case of loans to, among others, corporate farmers, producer organisations/companies of individual farmers, and 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 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 of up to ₹20 lakh (₹25 lakh now) will be made available to individuals on PSLfor the purchase/construction of a dwelling unit per family, provided the overall cost of the dwelling unit does not exceed ₹25 lakh. Housing loans to banks’ own employees will be excluded.
As of end-March 2015, there were 56 RRBs operating in the country, with a network of 20,059 branches covering 644 notified districts across 26 States and the Union Territory of Puducherry.
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