RBI Likely To Revise Priority Lending Targets Based On Sectors | SupportBiz

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RBI Likely To Revise Priority Lending Targets Based On Sectors

 
Tags: RBI, SME lending
A bank lending to a difficult sector in a difficult to reach district will benefit from a multiplier value based on the specific sector and district.

Mumbai, January 8: The Reserve Bank of India (RBI) is likely to revise priority sector lending (PSL) targets to create greater regional and sectoral specialisation among banks. Banks would also be required to meet an adjusted PSL target of 50 per cent against the current requirement of 40 per cent.

This recommendation is one of the many suggestions made by the RBI-appointed Nachiket Mor Committee on Comprehensive Financial Services for Small Businesses and Low-Income Households to improve lending to various sectors especially to the key segments such as agriculture, micro and small enterprises, housing, education and the weaker sections, The Hindu Business Line reports.

According to the recommendation, districts and sectors can be evaluated based on the difficulty in lending to them. A bank lending to a difficult sector in a difficult to reach district will benefit from a multiplier value based on the specific sector and district.

Banks will have to meet an adjusted PSL value of 50 per cent taking in account of the sector-district combination weightages. The committee further stated that if the government wants to provide relief in any form to the small farmer, it should be done as a direct benefit transfer (DBT) to the bank account of the farmer and not through the mechanism of either interest subvention or debt waiver.