PRIORITY SECTOR LENDING - REVAMPED GUIDELINE

To minimize regional disparity in Priority sector credit flow and boost economy to achieve sustainable development goals

- Navneet Prakash Sinha

The Reserve Bank of India has come up with a revised guidelines of priority sector lending to align with emerging national priorities for better credit penetration to credit deficit areas by increased lending to weaker sections including small and marginal farmers, renewal energy and health infrastructure with a sharper focus on inclusive development.

To address regional disparities in the flow of priority sector credit, higher weightage has been assigned to incremental priority sector credit in identified districts where priority sector credit flow is comparatively low. It has been decided to rank districts on the basis of per capita credit flow to the priority sectors and incentivize the credit flow to the districts with comparatively having a lower flow of priority sector credit along with credit flow to some specific sectors like clean energy, Health Infrastructure, and weaker sections. Accordingly, from the Financial Year 2022 onwards, a higher weightage (125%) has been prescribed to the incremental credit to the priority sector in the identified districts where per capita PSL is less than Rs. 6000/- and a lower weightage (90%) would be assigned for the incremental priority sector credit in the identified districts having per capita PSL greater than Rs. 25000/- where the credit flow is comparatively higher.

The RBI has identified 184 districts with low PSL credit flow. In the revised PSL guideline, the targets for 'Small and Marginal Farmers' and 'Weaker Sections' are to be increased in a phased manner. Also, a higher credit limit has been given for Farmer Producers Organizations (FPOs)/ Farmer Producers Companies (FPCs) that undertaking farming with assured marketing of their produce at a pre-determined price.