RBI tweaks priority sector lending norms in agri, housing & MSE space

The Reserve Bank of India has revised the priority sector lending norms in the direct agricultural segment. Loans up to Rs 2 crore to companies involved in farming and allied activities will be treated as lending for direct agriculture under priority sector lending (PSL) status.

RBI has said that lending by banks to corporates, including producer companies of individual farmers, partnership firms and co-operatives of farmers in agriculture and allied activities, such as dairy, fishery, animal husbandry, poultry, bee-keeping and sericulture, up to an aggregate limit of Rs 2 crore, would qualify for priority sector lending.

In case the loan limit per borrower is more than Rs 2 crore, the entire loan should be treated as indirect finance to agriculture.

Bank loans to housing finance companies (HFCs) for onward lending for purchase/construction/reconstruction of individual dwelling units or for slum clearance & rehabilitation of slum dwellers would also be considered for PSL status. However, the limit for these loans is up to Rs 10 lakh per borrower and the interest rate charged to the ultimate borrower should not exceed the lowest lending rate of the bank’s other housing loans plus 2 per cent per annum.

For the purpose of identifying economically weaker sections and low income groups, the family income limit of Rs 1,20,000 per annum, irrespective of location, is prescribed.

The eligibility under priority sector loans to HFCs is restricted to 5 per cent of the individual bank’s total priority sector lending, on an ongoing basis. The maturity of bank loans should be co-terminus with average maturity of loans extended by HFCs. Banks should also maintain necessary borrower-wise details of the underlying portfolio.

Also, credit to micro and small enterprises (MSEs) engaged in services segment will be eligible for direct finance under priority sector up to an aggregate loan limit of Rs 2 crore per borrower or unit.

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