PRATHAM BANKER
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PRIORITY SECTOR LENDING
Priority Sector are those sectors which the Government of India and Reserve Bank of
India consider as important for achieving Sustainable Development Goals (SDGs) of the
country.
It enables better credit penetration to credit deficient areas, increased lending to small
and marginal farmers and weaker sections, boost credit to renewable energy, and
health infrastructure and allied sectors that need credit boost.
The categories under priority sector are as follows:
Agriculture
Micro, Small and Medium Enterprises
Export Credit
Education
Housing
Social Infrastructure
Renewable Energy
Others
Some Important Term:
UCB: Urban Co-operative Bank
ANBC: Adjusted Net Bank credit
CEOBE: Credit Equivalent of Off Balance Sheet Exposure.
SMF: Small and Marginal Farmer(Marginal farmer-Posses farmland less than 1 Hectare,Small Farmer
More than 1 Hectare and up to 2 Hectare.)
RRB: Regional Rural Bank
NWR- Negotiable Warehouse Receipt
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PRATHAM BANKER
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The targets and sub-targets set under PSL
Categories Domestic Foreign banks with Regional Rural Small Finance
commercial banks less than 20 branches Banks Banks
(excl. RRBs &
SFBs) & foreign
banks with 20
branches and
above
Total 40 % of ANBC or 40% of ANBC or 75% of ANBC 75% of ANBC or
Priority CEOBE whichever is CEOBE whichever is or CEOBE CEOBE
Sector higher higher(out of which up whichever is whichever is
to 32% can be in the higher higher
form of lending to
Exports and not less
than 8% can be to any
other priority sector)
Agricultur 18%(10% for small NA 18%(10% for 18%(10% for
e and marginal small and small and
Farmer) marginal marginal Farmer)
Farmer)
Micro 7.5% NA 7.5% 15%
Enterprise
Advance 12% NA 15% 12%
to weaker
sections
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PRATHAM BANKER
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Targets for lending to SMFs and for Weaker Sections
Not applicable to UCB
Weaker section target for RRB is continue to be 15%)
It is increasing from 2020-21
Financial Year Small and Marginal Farmers Weaker Sections Target
Target
2020-21 8% 10%
2021-22 9% 11%
2022-23 9.5% 11.5%
2023-24 10% 12%
PSL Targets for Urban Co-operative Banks
Categories Primary Urban Co-operative Banks PSL Targets
Total PSL FY2021-22 FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26
50% 60% 60% 65% 75%
Micro 7.5%
Enterprise
Advance to FY2021-22 FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26
weaker
11.50% 11.50% 11.50% 11.75% 12%
Sections
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PRATHAM BANKER
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Adjustments for weights in PSL Achievement
To address regional disparities in the flow of priority sector credit at the district level, it has been
decided to rank districts on the basis of per capita credit flow to priority sector laon.
From FY 2021-22 onwards, a higher weight (125%) would be assigned to the incremental priority
sector credit in the identified districts where the credit flow is comparatively lower (per capita PSL
less than ₹6000),
A lower weight (90%) would be assigned for incremental priority sector credit in the identified
districts where the credit flow is comparatively higher (per capita PSL greater than ₹25,000).
The districts other than those mentioned in Annex IA and IB will continue to have existing
weightage of 100%
Important PSL limits- Sectors Wise
Other Important Limit under Priority Sector
Category Limit for Priority Sector
Education 20 Lakh/Borrower
Housing 35 lakh for Metropolitan city(Max cost upto 45 lakh)
25 lakh for other city(Max cost upto 35 lakh)
Housing loan to own employees will not be eligible
for PSL
Housing -Repair 10 lakh for metropolitan city,6 lakh for other city
Social Infrastructure(school,Drinking 5 crore/Borrower(Not applicable to RRB,UCB & SFB)
water facilities,sanitation facility)
Social Infrastructure (Building 10 crore/borrower((Not applicable to RRB,UCB &
healthcare facilities including Ayushman SFB)
Bharat healthcare Building in Tier III &
IV cities.
Renewable Enery(Solar based and 30 Crore/Borrower entity
Biomas based power Generator,Micro
Hydel Plants,street lighting systems and
remote village electrification )
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PRATHAM BANKER
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Startup engaged in agriculture and 50 Crore/Borrower
allied services/Startup engaged in
MSME
Loans for Food and Agro-processing 100 Crore/Borrower
Loans against Pledge/hypothecation of 75 lakh against NWR/ENWR,
Agriculture produce(Max period of 12
50 lakh other than NWR/eNWR NWR-Negotiable
months) to individual farmer
Warehouse Receipt
eNWR- Electronic NWR
Farm credit to corporate farmers/FPO 2 crore/borrower entity 75 lakh against
NWR/ENWR,50 lakh other than NWR/eNWR
₹5 crore per borrowing entity to FPOs/FPCs
undertaking farming with assured marketing of
their produce at a pre-determined price.
UCB not permitted to lend to FPO/FPC
Agriculture Infrastructure 100 crore/Borrower
Note: Banks/UCBs having any shortfall in lending to priority sector shall be allocated amounts
for contribution to the Rural Infrastructure Development Fund (RIDF) established with
NABARD and other funds with NABARD/NHB/SIDBI/ MUDRA Ltd., as decided by the Reserve
Bank from time to time.
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