🔹 1. Introduction to Priority Sector Lending

Priority Sector Lending (PSL) refers to mandatory lending by banks to sectors that are critical for inclusive economic development but may not receive adequate credit under normal banking practices.

➡️ Introduced by RBI to:

• Ensure financial inclusion

• Promote balanced regional development

• Support weaker and vulnerable sections

🔹 2. Overall PSL Targets (Most Important for Exams)

According to RBI guidelines:

• Domestic Banks & Foreign Banks (≥20 branches)
  👉 40% of ANBC or CEOBE (whichever is higher)

• Regional Rural Banks (RRBs) & Small Finance Banks (SFBs)
  👉 75% of ANBC

📌 From your document (Page 3):

• Agriculture → 18% (with 10% for Small & Marginal Farmers)

• Micro Enterprises → 7.5%

• Weaker Sections → 12%

🔹 3. Key Definitions

✔️ ANBC (Adjusted Net Bank Credit)

= Total Bank Credit + Investments in Non-SLR Bonds

✔️ CEOBE

= Credit Equivalent of Off-Balance Sheet Exposure

👉 Banks must meet PSL targets based on higher of ANBC or CEOBE

🔹 4. Major Categories under PSL

1. Agriculture

• Farm credit (no upper limit for individuals)

• Agri-infrastructure (up to ₹100 crore)

• Agri startups (₹50 crore)

📌 Includes:

• Crop loans

• Allied activities (dairy, fisheries, poultry)

2. MSME (Micro, Small & Medium Enterprises)

📊 Revised Classification (Important for Exams):

📌 From Page 9 of your PDF

3. Export Credit

• Incremental export credit considered

• Limit: ₹40 crore per borrower

• Cap: 2% of ANBC

4. Education Loans

• Up to ₹20 lakh (India & Abroad)

5. Housing Loans

6. Social Infrastructure

• ₹5 crore (general)

• ₹10 crore for healthcare (Tier II–VI)

7. Renewable Energy

• ₹30 crore (general)

• ₹10 lakh for households

8. Others

• SHGs, JLGs

• Distressed farmers

• Women beneficiaries

🔹 5. Weaker Sections (Very Important)

👉 Target: 12% of ANBC

Includes:

• Small & Marginal Farmers

• SC/ST

• SHGs/JLGs

• Women (loan up to ₹1 lakh)

• DRI beneficiaries

• Minority communities

• Persons with disabilities

📌 Detailed list in Page 25 (table format)

🔹 6. MUDRA Loans (Frequently Asked in Exams)

📌 No collateral required (CGTMSE coverage)

🔹 7. CGTMSE (Credit Guarantee Scheme)

• Guarantee coverage:

  • Up to 85% for micro loans

  • Up to 90% for women entrepreneurs

📌 Updated from Dec 2024

🔹 8. Non-Achievement of PSL Targets

If banks fail:

➡️ Mandatory contribution to:

• RIDF (NABARD)

• Other funds (SIDBI, NHB, MUDRA)

📌 Impacts regulatory approvals
(Page 6)

🔹 9. Priority Sector Lending Certificates (PSLC)

✔️ Concept:

• Banks with surplus PSL → sell certificates

• Banks with deficit → buy certificates

✔️ Types:

• PSLC General

• PSLC Agriculture

• PSLC MSME

• PSLC Small & Marginal Farmers

✔️ Key Points:

• Traded on RBI e-Kuber platform

• Valid till 31st March

• No transfer of credit risk

📌 From Page 28–30

🔹 10. On-Lending to NBFCs

• Agriculture → ₹10 lakh per borrower

• MSME → ₹20 lakh per borrower

• Overall cap → 5% of bank PSL

🔹 11. Important Exam Highlights (Quick Revision)

• PSL Target = 40% (Banks), 75% (RRBs/SFBs)

• Agriculture = 18% (10% for S&M farmers)

• Micro Enterprises = 7.5%

• Weaker Sections = 12%

• Education Loan = ₹20 lakh

• Housing PSL eligibility depends on cost + loan limit

• PSLC validity = 1 year

• RIDF penalty for shortfall

🔹 12. Frequently Asked MCQ Traps

• ✔️ Staff housing loans → ❌ NOT PSL

• ✔️ Export credit → Only incremental portion

• ✔️ MSME classification → Based on Investment + Turnover

• ✔️ PSLC → No risk transfer