RBI revises priority sector lending norms

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.