RBI revises priority sector lending guidelines, increases loan limits for housing, renewable energy

The Reserve Bank of India (RBI) on Monday issued revised guidelines for Priority Sector Lending (PSL) aimed at improving the targeting of bank credit to key sectors of the economy. The updated norms will come into effect from April 1, 2025.
The RBI stated that the revised guidelines are designed to better direct bank credit to priority sectors, enhancing the coverage and effectiveness of PSL, according to news agency PTI.
Key changes in the revised norms include higher loan limits for housing loans, expanding eligibility for renewable energy-related loans, and adjusting the overall PSL target for urban cooperative banks (UCBs) to 60% of Adjusted Net Bank Credit (ANBC) or Credit Equivalent of Off-Balance Sheet Exposures (CEOBSE), whichever is higher.
The updated norms also broaden the scope for ‘Weaker Sections’ borrowers, removing the cap on loans by UCBs to individual women beneficiaries.
For the housing sector, bank loans for priority sector classification will now be divided into three categories based on the population of the area: Rs 50 lakh for centres with a population of 50 lakh and above, Rs 45 lakh for centres with a population between 10 lakh and 50 lakh, and Rs 35 lakh for centres with populations below 10 lakh. The maximum cost of dwelling units has also been specified for each category.
On renewable energy, bank loans for renewable energy-based power generators and public utilities up to Rs 35 crore will be eligible for PSL classification. Additionally, loans up to Rs 10 lakh per borrower for individual households related to renewable energy projects will also be eligible.
The priority sectors under the new guidelines include agriculture, MSME, export credit, education, housing, social infrastructure, and renewable energy.