The Reserve Bank of India (RBI) on Friday eased lending norms for small finance banks by reducing their mandatory priority sector lending requirement—covering areas like agriculture and small enterprises by 15 percentage points.
RBI in a statement, said, "On a review, it has been decided that financial year 2025-26 onwards, the additional component (35 per cent) of priority sector lending (PSL) shall be reduced to 20 per cent, thereby making the overall PSL target as 60 per cent of Adjusted Net Bank Credit (ANBC) or Credit Equivalent of Off-Balance Sheet Exposures (CEOBE), whichever is higher." "The SFB shall continue to allocate 40 per cent of its ANBC or CEOBE, whichever is higher, to different sub-sectors under PSL as per the extant PSL prescriptions, while the balance 20 per cent shall be allocated to any one or more sub-sectors under the PSL where the bank has competitive advantage."
Small finance banks currently have to extend 75% of their loans to priority sectors. After a review, the Reserve Bank of India has effectively cut the requirement to 60% of total lending.
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