RBI Revises Priority Sector Lending Guidelines To Promote Financial Inclusion

New Delhi, Jun 22 (KNN) The Reserve Bank of India (RBI) has announced modifications to its priority sector lending guidelines, aimed at encouraging banks to increase small loan disbursements in economically disadvantaged areas.

The revised norms, set to take effect from the fiscal year 2025-26, introduce a weighted approach based on the average loan sizes across districts.

Under the new framework, fresh priority sector loans in districts with low credit availability (less than Rs 9,000 per person) will receive a higher weightage of 125 per cent.

Conversely, loans in districts with high credit availability (exceeding Rs 42,000 per person) will be assigned a lower weightage of 90 per cent.

For districts falling between these thresholds, the current weightage of 100 per cent will remain unchanged.

The central bank stated, "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."

This policy adjustment is designed to address regional disparities in credit access and promote more balanced financial inclusion across India.

By incentivising lending in underserved areas and discouraging excessive lending in districts with already high loan sizes, the RBI aims to foster a more equitable distribution of priority sector credit.

The new guidelines are expected to impact banks' lending strategies and potentially reshape the priority sector lending landscape in the coming years.

(KNN Bureau)