The Reserve Bank of India (RBI) has issued new guidelines for the priority sector lending (PSL) implemented from 1 April 2025. This update means how banks lend to important sectors such as education and renewable energy of small businesses. Its purpose is to provide easily to those sections that are most needed and support balanced development across India.
RBI priority sector lending
Priority Sector Borrow is a system where banks should give a certain part of their loans to areas that help the country grow in a fair and inclusive manner. These include fields such as agricultural small industry housing education renewable energy and support for weaker sections of society. By doing this, banks help in uplifting the sections that are often left behind in regular borrowings.
The RBI decided to change the rules due to changing economic needs and suggestions from banks and other stakeholders. New areas of development have emerged over time and credit requirements have changed. These updates will help improve the access and utility of the PSL system.
Large changes in priority sector borrowing guidelines 2025
Increase in loan limit for housing and agriculture
The limit of housing loan has been increased under the priority sector so that people can buy houses with a slightly higher price and still get support from banks. Similarly, the loan limit for farming and small businesses has also gone to ensure that rural and micro -level borrowers will help more.
More support for renewable energy projects
New rules expand the types of renewable energy projects that can gain PSL benefits. Now public utilities and private power generators can also be funded. The loan cap for such projects has been increased to 35 crores per borrower.
Education and infrastructure
Loan boundaries for education are raised not only to support regular courses, but also to support skill development and commercial training. The maximum loan amount for education under PSL is now 25 lakh per borrower. Social projects like setting up toilets or water supply systems of schools in rural and urban areas are now eligible up to 8 crore.
Pay additional attention to poor districts
To reduce regional imbalance, RBI has added weightage to loans given in 196 districts with low income levels. Banks will get 125 percent credit price for loans in these areas. On the other hand, lending in rich districts will be counted as 90 percent to avoid concentration in urban areas.
Better inclusion for weaker sections
RBI has added more activities under the category of weaker sections. This includes women self-help groups and other deprived groups. Earlier, restrictions have also been lifted for women on loans for urban cooperative banks, making it easier for these banks to lend to women borrowers.
PSL target for banks
According to the guidelines, all banks, including small finance banks of commercial banks, RRBs and cooperative banks, will have to lend at least 40 percent of their adjusted net bank credit to priority sectors. There are also specific goals within it for agricultural micro-entertainment education housing and green energy projects.
