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Now, bank credit to start-ups will get priority sector tag

The Reserve Bank of India (RBI)on Friday issued revised guidelines with an aim to address disparities in priority sector lending (PSL) to credit deficient areas

twitter-logoBusinessToday.In | September 4, 2020 | Updated 14:06 IST
Now, bank credit to start-ups will get priority sector tag
Reserve Bank of India

The Reserve Bank of India (RBI)on Friday issued revised guidelines with an aim to address disparities in priority sector lending (PSL) to credit deficient areas.  The RBI said that bank finance to start-ups (up to Rs 50 crore), loans to farmers for installation of solar power plants for solarisation of grid connected agriculture pumps and credit for setting up compressed biogas plants have been included as fresh categories eligible for finance under priority sector.
Under the revised guidelines, banks are required to set aside a specific portion of bank lending to sectors considered to be important by the central bank. Priority sector lending is an important role given by the RBI 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, poor people for housing, students for education and other low income groups and weaker sections.
In addition, the targets prescribed for "small and marginal farmers" and "weaker sections" are being increased in a phased manner, RBI also said.
Besides, a higher credit limit has been specified for Farmers Producers Organisations (FPOs) or Farmers Producers Companies (FPCs) undertaking farming with assured marketing of their produce at a pre-determined price, the central bank added.

The loan limits for renewable energy have also been doubled. For improvement of health infrastructure, credit limit for health infrastructure (including those under Ayushman Bharat) has been doubled by the central bank.

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