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Priority sector lending to include start-ups
Why is it in news?
- RBI has decided to broaden the scope of priority sector lending (PSL) by including start-ups and enhancing borrowing limits for renewable energy sectors.
Details:
- The central bank would also increase the targets for lending to ‘small and marginal farmers’ and ‘weaker sections’ under the PSL.
- Eligible entities get access to credit on easier terms from banks under the PSL.
About Priority Sector Lending (PSL):
- Priority sectors are those sectors which are considered as important for the development of the basic needs of the country.
- Following are considered Priority Sectors:
(1) Agriculture
(2) Micro, Small and Medium Enterprises
(3) Export Credit
(4) Education
(5) Housing
(6) Social Infrastructure
(7) Renewable Energy
- According to priority sector norms, scheduled commercial banks have to give 40% of their loans to the identified priority sectors in accordance with the RBI regulations.