Priority Sector Lending: 2025 Directions
Targets, sub-targets and key loan limits under RBI's Priority Sector Lending Directions effective from 1 April 2025.
Key points
- Revised PSL Directions were issued on 24 March 2025 and apply from 1 April 2025.
- Domestic commercial banks must lend 40% of ANBC or CEOBSE, whichever is higher, to the priority sector.
- Sub-targets: Agriculture 18%, Micro Enterprises 7.5%, Weaker Sections 12%.
- Education loans up to ₹25 lakh qualify; housing limits now go up to ₹50 lakh in centres with population of 50 lakh and above.
- Shortfall is deposited in RIDF and similar funds with NABARD, SIDBI and NHB.
What is priority sector lending?
Priority sectors are those that may not get timely and adequate credit on purely commercial terms but are important for the economy – agriculture, MSMEs, export credit, education, housing, social infrastructure, renewable energy and the weaker sections. RBI requires banks to direct a fixed share of their credit to these sectors.
Targets for domestic scheduled commercial banks
All targets are a percentage of Adjusted Net Bank Credit (ANBC) or Credit Equivalent of Off-Balance Sheet Exposures (CEOBSE), whichever is higher. This applies to domestic commercial banks and foreign banks with 20 or more branches; RRBs and SFBs have separate targets.
| Category | Target |
|---|---|
| Total priority sector | 40% |
| Agriculture | 18% |
| – of which Non-Corporate Farmers | 14% |
| – of which Small and Marginal Farmers | 10% |
| Micro Enterprises | 7.5% |
| Weaker Sections | 12% |
Targets for other bank groups
| Bank group | Total PSL target |
|---|---|
| Foreign banks with fewer than 20 branches | 40% (up to 32% may be export credit; at least 8% to other priority sectors) |
| Regional Rural Banks | 75% (weaker sections 15%) |
| Small Finance Banks | 60% |
| Urban Co-operative Banks | 60% |
Key loan limits
Housing (individual dwelling units)
| Centre population | Loan limit | Maximum cost of dwelling |
|---|---|---|
| 50 lakh and above | ₹50 lakh | ₹63 lakh |
| 10 lakh to below 50 lakh | ₹45 lakh | ₹57 lakh |
| Below 10 lakh | ₹35 lakh | ₹44 lakh |
Both the loan limit and the cost cap must be satisfied. Loans for repairs of damaged dwelling units qualify up to ₹15 lakh, ₹12 lakh and ₹10 lakh respectively.
Other limits
- Education: loans to individuals for education, including vocational courses, up to ₹25 lakh.
- Renewable energy: up to ₹35 crore per borrower for power generators and public utilities; up to ₹10 lakh per borrower for individual households.
- MSME: all bank loans to MSMEs (as defined under the MSMED Act) qualify; there is no general loan cap.
- Start-ups engaged in MSME activities: up to ₹50 crore.
Shortfall and PSLCs
- Banks that miss targets or sub-targets must contribute the shortfall to the Rural Infrastructure Development Fund (RIDF) with NABARD and to other funds with NABARD, SIDBI or NHB, as allocated by RBI.
- Banks can also buy and sell Priority Sector Lending Certificates (PSLCs) on RBI's e-Kuber platform to manage surpluses and shortfalls; the underlying loan stays on the original lender's books.
- Achievement is measured on a quarterly average basis.