Priority Sector Lending (PSL):
Those sectors which the GOI and RBI consider as important for the development of the basic needs of the country and are to be given priority over other sectors. The categories of priority sector are:
1. Agriculture
2. Micro, Small and Medium Enterprises
3. Export Credit
4. Education
5. Housing
6. Social Infrastructure
7. Renewable Energy
8. Others
Provisioning of PSL:
- Domestic Scheduled Commercial Banks and foreign banks are to provide 40% of their Adjusted Net Bank Credit (ANBC) to priority sectors.
- Regional Rural Banks and Small Finance Banks have to provide 75 % of ANBC.
- RBI has revised Priority Sector Lending (PSL) Targets for Urban (Primary) Cooperative Banks(UCB).
- Earlier the PSL target for UCBs was 40% of the bank credit and now it has been increased to 75% in a phased manner: 60% by 31st March 2024 65% by 31st March 2025 75% by 31st March 2026
If in case, banks fail to provide stipulated credit, then the shortfall is transferred to RIDF.
