What is meant by priority sector lending certificate?
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What is meant by priority sector lending certificate?
Priority Sector Lending Certificates (PSLCs) are instruments that enable banks to achieve their priority sector lending targets without actually disbursing loans to sectors outside their comfort zone.
Who issue priority sector lending certificates?
Reserve Bank of India
Reserve Bank of India issues Notification on “Priority Sector Lending Certificates” and issues instructions on trading in PSLCs.
What is PSL certificate in banking?
What are Priority Sector Lending Certificates (PSLCs)? Priority sector lending certificates (PSLCs) are certificates that are issued against priority sector loans for banks. They allow banks to meet their targets and sub-targets – when it comes to priority sector lending – by buying the instruments.
What is included in priority sector lending?
This role is assigned by the Reserve Bank of India to the banks for providing a specified portion of the bank lending to few specific sectors like agriculture and allied activities, micro- and small enterprises, education, housing for the poor, and other low-income groups and weaker sections. …
Why priority sector lending is important?
Priority Sector means those sectors which the Government of India and Reserve Bank of India consider as important for the development of the basic needs of the country and are to be given priority over other sectors. The banks are mandated to encourage the growth of such sectors with adequate and timely credit.
How much is the PSL target for banks in India?
The overall priority sector lending (PSL) target for UCBs stood at 40\% of the adjusted net bank credit (ANBC) or credit equivalent amount of off-balance sheet exposure (CEOBSE), whichever is higher.
What is the percentage of priority sector lending?
Priority Sector Lending – Small Finance Banks and RRBs – Target
| Categories | Target |
|---|---|
| Total Priority Sector | 75 per cent of Adjusted Net Bank Credit |
| Agriculture | 18 per cent of ANBC. Within the 18 per cent target for agriculture, a target of 8 percent of ANBC is prescribed for Small and Marginal Farmers. |
Do cooperative banks have PSL?
UCBs have to increase their PSL portfolio – comprising loans to agriculture, micro, small and medium enterprises, export credit, education, housing, social infrastructure, among others – so that it accounts for 75 per cent of their advances by March 2024.
Is PSL applicable to RRB?
PSL directions last revised in September 2020, require domestic and foreign banks to achieve a credit disbursement target of 40\% of lending book while regional rural banks (RRB) and small finance banks (SFB) need to attain 75\%.