Priority Sector Lending
Priority Sector Lending (PSL) is a vital rule set by the Reserve Bank of India (RBI). It ensures that banks provide credit to sectors that help the country grow but often struggle to get loans. Usually, banks prefer lending to big companies because it is safer and easier. This leaves out small farmers, small shop owners, and low-income students. To solve this, the RBI identifies specific areas as 'Priority Sectors'.
Concepts (3)
This category includes loans for building basic facilities that help society. Examples include building schools, health care centers, and drinking water facilities.
This category includes loans for building basic facilities that help society. Examples include building schools, health care centers, and drinking water facilities. Banks can give loans up to 5 crore rupees per borrower for these purposes in specific areas. It helps in improving the quality of life in rural and semi-urban India.
ANBC is the total amount used to calculate PSL targets. It is the bank's total credit minus certain types of bills and additions allowed by the RBI. Essentially, it represents the actual money a bank has lent out to the public.
ANBC is the total amount used to calculate PSL targets. It is the bank's total credit minus certain types of bills and additions allowed by the RBI. Essentially, it represents the actual money a bank has lent out to the public. For example, if a bank has 1000 crore rupees in ANBC, it must lend 400 crore to priority sectors.
To promote green energy, RBI added this category. Loans are given for solar power plants, wind mills, and bio-gas plants. For individual households, the loan limit is 10 lakh rupees.
To promote green energy, RBI added this category. Loans are given for solar power plants, wind mills, and bio-gas plants. For individual households, the loan limit is 10 lakh rupees. For larger public utilities, the limit is higher at 30 crore rupees. This encourages people to move away from coal and use clean energy sources.
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