Priority Sector Lending Guidelines

Under Priority Sector Lending (PSL) guidelines, banks have to set aside a specific portion of bank lending to sectors deemed important by the central bank.
The following are the categories listed by RBI under PSL
- Agriculture
- Micro, Small and Medium Enterprises
- Export Credit
- Education
- Housing
- Social Infrastructure
- Renewable Energy
All scheduled commercial banks and foreign banks with a sizeable presence in India are mandated to set aside 40% of their Adjusted Net Bank Credit (ANDC) for lending to these sectors.
RBI has recently assigned PSL status to India’s start-up sector.
Start-ups were considered under the MSME category and were required to show three years of profitability
RBI also recently increased the limits for renewable energy, including solar power and compressed bio-gas plants.
Higher weighting will be assigned to incremental priority sector credit in identified districts where credit flow is comparatively lower.
Whereas a lower weighting will be assigned in case of a comparatively higher credit flow.