The Reserve Bank of India (RBI) on Monday issued revised priority sector lending (PSL) guidelines for banks, enhancing limits for loans such as housing and education, even as it the PSL target for urban cooperative banks (UCBs) has been brought down from 75 per cent to 60 per cent.
The revised guidelines, which is expected to facilitate better targeting of bank credit to the priority sectors of the economy, will be effective from April 1, 2025.
In a move that will encourage banks to lend more to housing, RBI said loan limit for individuals for purchase/construction of a dwelling unit (of maximum ₹63 lakh cost) per family at Centres with population of 50 lakh and above will be ₹50 lakh will be classified as PSL.
Loan limit for individuals for purchase/construction of a dwelling unit (of maximum ₹57 lakh cost) per family at Centres with population of 10 lakh and above but below 50 lakh will be ₹45 lakh.
Loan limit for individuals for purchase/construction of a dwelling unit (of maximum ₹44 lakh cost) per family at Centres with population below 10 lakh will be ₹35 lakh.
Extant guidelines
Under the extant guidelines, loans to individuals up to ₹35 lakh in metropolitan centres (with population of ten lakh and above) and up to ₹25 lakh in other centres for purchase/construction of a dwelling unit per family provided the overall cost of the dwelling unit in the metropolitan centre and at other centres does not exceed ₹45 lakh and ₹30 lakh, respectively, are classified as PSL
Loans to individuals for educational purposes, including vocational courses, not exceeding ₹ 25 lakh ( ₹20 lakh currently) will be considered as eligible for priority sector classification.
The RBI has broadened the purposes based on which loans may be classified under ‘Renewable Energy’.
In a move that will bring cheer to UCBs, the overall PSL target for UCBs has been revised, FY2024-25 onwards, to 60 per cent of loans. Under the current guidelines, these Banks have to achieve PSL target of 65 per cent of their loans by FY25 and 75 per cent from FY26 onwards.
