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RBI revises priority sector lending norms

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MUMBAI:

RBI

has revised its priority sector guidelines to encourage banks to provide

small loans

in economically disadvantaged districts with low

average loan sizes

. The new norms discourage lending in districts with high average loan sizes.
Starting from FY25, more weight (125%) will be given to

fresh priority sector loans

in districts where the loan availability is low (less than Rs 9,000 per person).

In districts with high loan availability (more than Rs 42,000 per person), the loans will have a weight of 90%. With the exception of outlier districts with low credit availability and those with high loan sizes, all other districts will continue to have the current importance level of 100%.
“RBI has decided to rank districts based on

per capita credit flow

to the priority sector, and to establish an

incentive framework

for districts with lower

credit flow

and a

disincentive framework

for districts with higher priority sector credit flow,” RBI said.

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