Recent RBI guidelines on Lending Business

The Reserve Bank of India (RBI) on Friday issued revised guidelines for priority sector lending, wherein the credit limits have been raised for renewable energy, health infrastructure, and for farmer producer organisations.

The RBI Governor announced that the startups have been brought under the ambit of priority sector lending and bank finance of up to Rs 50 crore has been included as a fresh category under the priority sector.

A higher credit limit has been specified for Farmers Producers Organisations (FPOs) or Farmers Producers Companies (FPCs), undertaking farming with assured marketing of their produce at a pre-determined price, said the RBI statement.

Loan limits for renewable energy have also been increased (doubled) along with the credit limit for health infrastructure (including those under Ayushman Bharat).

Apart from startups, loans to farmers for installation of solar power plants for solarisation of grid-connected agriculture pumps and loans for setting up Compressed Bio-Gas (CBG) plants have been included as fresh categories eligible for finance under the priority sector.

"Reserve Bank of India has comprehensively reviewed the Priority Sector Lending (PSL) guidelines to align it with emerging national priorities and bring a sharper focus on inclusive development, after having wide-ranging discussions with all stakeholders," it said.

As per the central bank, the revised guidelines will enable better credit penetration to credit deficient areas, increase lending to small and marginal farmers and weaker sections, boost credit to renewable energy, and health infrastructure.

The guidelines aim to address regional disparities in the flow of priority sector credit, higher weightage have been assigned to incremental priority sector credit in 'identified districts' where priority sector credit flow is comparatively low and the targets prescribed for "small and marginal farmers" and "weaker sections" are being increased in a phased manner, as per the RBI statement.

Reserve Bank of India