- Reserve Bank of India (RBI) Revised the Priority Sector Lending (PSL) Guidelines For StartUps
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Reserve Bank of India (RBI) Revised the Priority Sector Lending (PSL) Guidelines For StartUps
Reserve Bank of India (RBI) Revised the Priority Sector Lending (PSL) Guidelines For StartUps now Bank loans to start-ups to get priority sector tag.
- Reserve Bank of India has revised Priority Sector Lending guidelines.
- According to the Reserve Bank of India (RBI), this movement is aimed at addressing regional disparities in the flow of priority sector credit.
- In the revised PSL guidelines, higher weightage has been assigned to incremental priority sector credit in identified districts where priority sector credit flow is comparatively low.
- Bank finance to start-ups up to Rs 50 crore, loans to farmers for installation of solar power plants for solarisation of grid-connected agriculture pumps and loans for setting up Compressed Bio Gas plants have been included as fresh categories eligible for finance under priority sector.
- The Reserve Bank of India (RBI) said that the targets prescribed for “small and marginal farmers” and “weaker sections” are being increased in a phased manner.
- The RBI also said that the loan limits for renewable energy have been increased under the revised guidelines. For improvement of health infrastructure, the credit limit for health infrastructure (including those under ‘Ayushman Bharat’) has been doubled.
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Frequently Asked Questions On Priority Sector Lending (PSL)
In an economy, there are several sectors which are essential and play a collaborative role in the economic development of the country. This sector needs special care from the government or Central Bank as they are not self-sufficient to survive yet very important – these sectors are broadly classified as Priority Sectors which have certain specified elaboration defined by RBI. The Central Bank (RBI) issues instructions to the banks engaged in commercial lending to lend a specified portion of their lending to these Priority Sectors and sets targets to be achieved in the best interest of the nation. Such lendings by the Banks are called Priority Sector Lending.
Agriculture, Micro Small and Medium Enterprises (MSME), Export Credit, Education, Housing, Social Infrastructure, Renewable Energy, StartUps and Weaker Section are the main categories of the priority sectors.
The target under PSL for all the domestic scheduled commercial banks and foreign banks with 20 or more than 20 branches are 40%.