Understand It All About Priority Sector Lending | AU Small Finance Bank
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Priority Sector Lending

    Understanding Priority Sector Lending
    PSL mein lend karna hai, sabko aage badhana hai!

    Let's read a story. Sita and Lakshman wanted to buy a tractor for their agricultural field but unke pass paise nahi the. Ram is ready to loan it to both because he believes that money should be given to all sectors or sectors jo development mein contribute Kare. So be like Ram.

    Yahi case hai banks ke saath bhi. Banks ka main purpose is to develop sectors of an economy. Now hum sabko pata hai ki kisi business or economic activity ko start karne me first requirement is money/credit. But at the same time, RBI needs to make sure that credit har sector ke pass pahoche. Therefore, according to RBI, banks ki responsibility hai to develop certain priority sectors by lending kuch percent % of its credit towards these sectors. Different banks have different targets like:

    1. Small finance banks: 75% of net credit
    2. Regional rural banks: 75% of net credit
    3. Commercial banks (both public and private): 40% of net credit
    4. Foreign banks: 40% of net credit (banks with less than 20 branches)
    5. Urban cooperatives: 40% of net credit.

    This target is compulsory for the banks. The main purpose of PSL is the progress of all sectors and not focus on koi ek sector. These sectors are:

    1. Agriculture
    2. Export Credit
    3. Social Infrastructure like (Health care facilities, Schools, Drinking water facilities, sanitation facilities, construction and redevelopment of household toilets and household water quality improvements in Tier II and Tier IV centres)
    4. Renewable energy
    5. Microcredit
    6. Educational loans
    7. Housing loans and others.

    Iske saath Banks lend to weaker sections under PSL. Some of these are Chote (small) and marginal farmers, Karigar (artisans), village and cottage industries, Scheduled Caste and Scheduled Tribes, Vyathith Kisaan ( Distressed farmers), Self Help Groups (SHGs)/ Swayam Sahayta Samooh/ a group of people jo paisa pool karke invest karte hai, etc.

    Thus, PSL includes those sectors which have an impact on large section of the population, jo employment provide kare aur weaker sections and Micro and Small Enterprises ko support kare. Hence, banks will lend to alag alag sectors not just to one sector to ensure overall development. Kyonki asli maza sab ke development ke saath aata hai.


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