RBI GR B | NABARD GR A | SEBI GR A

2019
Finance and MANAGEMENT
RBI FAQs
Priority Sector Lending

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PSL

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NABARD
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in 2016
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What is Priority Sector Lending?

Agriculture MSME

Priority Sectors

Need Assistance
What is Priority Sector Lending?

Agriculture MSME

To Lend Certain %
to these Sectors
Made Mandatory

RBI Banks
 Q.1

Which of the Following Sectors Does not come under Priority Sector Lending?

1. Agriculture
2. Housing
3. Social Infrastructure
4. Petroleum
 Q.1

Which of the Following Sectors Does not come under Priority Sector Lending?

1. Agriculture
2. Housing
3. Social Infrastructure
4. Petroleum
Total Targets Under Priority Sector Lending

Domestic scheduled commercial banks 40 per cent of Adjusted Net Bank

(excluding Regional Rural Banks and Credit or Credit Equivalent Amount
Small Finance Banks) and Foreign banks of Off-Balance Sheet Exposure,
with 20 branches and above
whichever is higher.

40 per cent of Adjusted Net Bank

Credit or Credit Equivalent Amount
Foreign banks with less than 20 branches of Off-Balance Sheet Exposure,
whichever is higher, to be achieved
in a phased manner by 2020..
Sub -Targets Under Priority Sector Lending

Domestic scheduled commercial banks 40 per cent of Adjusted Net Bank

(excluding Regional Rural Banks and Credit or Credit Equivalent Amount
Small Finance Banks) and Foreign banks of Off-Balance Sheet Exposure,
with 20 branches and above
whichever is higher.

40 per cent of Adjusted Net Bank

Credit or Credit Equivalent Amount
Foreign banks with less than 20 branches of Off-Balance Sheet Exposure,
whichever is higher, to be achieved
in a phased manner by 2020..
Sub -Targets Under Priority Sector Lending

Total Targets 40 percent

Remaining to Other
Agriculture – 18% MSME – 7.5%
Sectors

Advances to Weaker Sections – 10 %

Sub -Targets Under Priority Sector Lending

Total Targets 40 percent

Agriculture – 18% MSME – 7.5% Remaining to Other

Sectors

Small and
Marginal
Farmers – 8%

Advances to Weaker Sections – 10 %

 Q.2

Which of the following are not bound to meet PSL Targets?

1. Domestic Scheduled Commercial Banks

2. Foreign Banks with some having less than 20 branches in phased manner
3. Small Finance Banks
4. Regional Rural Banks
5. All the above
6. 3 and 4
 Q.3

What is the target under PSL for Small and Marginal Farmers?

1. 40%
2. 18%
3. 7.5%
4. 10%
5. None of the above
Sub -Targets Under Priority Sector Lending

Total Targets 40 percent

Agriculture – 18%
MSME – 7.5%
I. Farm Credit Remaining to Other
(No Limit for Loan
II. Agri Infra Sectors
Amount)
III. Ancillary Activities

Small and
Marginal
Farmers – 8%

Advances to Weaker Sections – 10 %

Eligibility for PSL Classification

Eligibility for PSL₹ 50 million per borrower for building social

infrastructure for activities namely schools, health care facilities,
drinking water facilities and sanitation facilities (including loans for
construction/ refurbishment of toilets and improvement in water
facilities in the household) in Tier II to Tier VI centers are eligible for
classification under priority sector.

Bank credit to Micro Finance Institutions (MFI) extended for on-

lending to individuals/ members of SHGs/ JLGs for water and
sanitation facilities is also eligible for classification as priority sector
loans under ‘Social Infrastructure’ subject to certain criteria
Eligibility for PSL Classification

Bank loans up to a limit of ₹ 150 million

Included - Solar based power generators ,biomass based power
generators, wind mills, micro-hydel plants and for non-conventional
energy based public utilities viz. street lighting systems, and remote
village electrification

For individual households, the loan limit is ₹ 1 million per borrower

Eligibility for PSL Classification

Loans to individuals for educational purposes including vocational

courses up to ₹ 1 million
Eligibility for PSL Classification

Loans to individuals up to ₹3.5 million in metropolitan centers (with

population of ten lakh and above) provided the overall cost is not more
than 4.5 million

Loans to individuals up to ₹ 2.5 million in other centers for

purchase/construction of a dwelling unit per family provided the overall
cost is not more than 3 million

The housing loans to banks’ own employees will be excluded

Eligibility for PSL Classification

Loans for repairs to damaged dwelling units of families up to ₹0.5

million in metropolitan centers and up to ₹0.2 million in other centers.

Bank loans to any governmental agency for construction of dwelling units

or for slum clearance and rehabilitation of slum dwellers subject to a
ceiling of ₹1 million per dwelling unit.
Eligibility for PSL Classification

Loans sanctioned by banks for housing projects exclusively for the purpose
of construction of houses for Economically Weaker Sections (EWS) and Low
Income Groups (LIG) provided the cost of it does not exceed 1 million per
dwelling unit

For the purpose of identifying the economically weaker sections and low
income groups, the family income limit is revised to ₹0.3 million per
annum for EWS and ₹0.6 million per annum for LIG as per PMAJ
Eligibility for PSL Classification

Bank loans to Housing Finance Companies (HFCs), approved by NHB for

their refinance, for on-lending for the purpose of purchase or construction
of dwelling units up to 1 million per borrower
Eligibility for PSL Classification
Eligibility for PSL Classification
Sub -Targets Under Priority Sector Lending

Total Targets 40 percent

Agriculture – 18%
I. Farm Credit Remaining to Other
MSME – 7.5%
II. Agri Infra Sectors
III. Ancillary Activities

Small and
Marginal
Farmers – 8%

Advances to Weaker Sections – 10 %

Definition o Weaker Sections
 Q.4

What is the maximum limit for loans for Solar Based Projects under PSL?

1. 15 crores
2. 10 crores
3. 20 crores
4. 12 crores
5. 5 crores
 Q.5

What is the limit for loan per borrower for building social infrastructure for
activities namely schools, health care facilities, drinking water facilities and
sanitation facilities under PSL?

1. 15 crores
2. 10 crores
3. 20 crores
4. 12 crores
5. 5 crores
 Q.6

What is the limit for Educational Loans under PSL?

1. 15 lakh
2. 10 lakh
3. 20 lakh
4. 1 lakh
5. 5 lakh
 Q.7

Loans to individuals up to ₹3.5 million in metropolitan centers (with

population of ten lakh and above) provided the overall cost is not more than
___________

1. 15 lakh
2. 25 lakh
3. 35 lakh
4. 45 lakh
5. 5 lakh
 Q.8
Loans sanctioned by banks for housing projects exclusively for the purpose of construction of houses
for Economically Weaker Sections (EWS) and Low Income Groups (LIG) provided the cost of it does not exceed
1 million per dwelling unit

For the purpose of identifying the economically weaker sections and low income groups, the family income
limit is revised _________ per annum for EWS

1. 1 lakh
2. 2 lakh
3. 3 lakh
4. 4 lakh
5. 5 lakh
 Q.9

8% Lending target to Small and Marginal Farmer Applies to which of the following?

1. All Domestic Scheduled Banks

2. Regional Rural Banks
3. Small Finance Banks
4. Foreign Banks having less than 20 Branches
5. None of the above
 Q.10

Incremental Export Credit up to what percent is allowed to be included under PSL for Domestic Scheduled
banks?

1. 1%
2. 2%
3. 3%
4. 4%
5. None of the above
Are Loans to MFI’s Part of PSL?

Yes
Are Loans to MFI’s Part of PSL?
85 percent of total assets of MFI should be disbursed as Loans

The loan is to be extended to a borrower whose household annual income in rural areas
Yes does not exceed ₹0.1 million while for non-rural areas it should not exceed ₹0.16 million.

Total indebtedness of the borrower does not exceed ₹0.1 million.

Tenure of loan is not less than 24 months when loan amount exceeds ₹30,000/- with right to
borrower of prepayment without penalty.

The loan is without collateral.

The margin cap should not exceed 10 percent for MFIs having loan portfolio exceeding ₹1
billion and 12 percent for others.
Is there any Preferential Interest Rate in PSL?

No Interest Rate Remains the same as under

Normal Conditions
 Does Investment in Securitized Asset fall Under
PSL?

Securitized Asset from

loans related to these
sectors except others

Would be Eligible
 Q.11

What is Net Bank Credit?

1. Bank Credit in India

2. Bank Credit in India – Bond debentures in Non SLR Categories
3. Bank Credit in India + Bond debentures in Non SLR Categories
4. Bank Credit in India – Bills Rediscounted with RBI
5. Bank Credit in India + Bills Rediscounted with RBI
 Any Shortfall in PSL Target?

Scheduled Commercial Banks having any shortfall in lending to priority sector shall be allocated amounts for
contribution to the Rural Infrastructure Development Fund (RIDF) established with NABARD and other Funds with
NABARD/NHB/SIDBI/ MUDRA Ltd. , as decided by the Reserve Bank from time to time. The achievement will be
arrived at the end of financial year based on the average of priority sector target /sub-target achievement as at the
end of each quarter.
PSL Certificates

Bank A has over achieved

Bank B has not achieved the
PSL targets
PSL Targets
Bank A can sell PSL Certificates
to Bank B
PSL Certificates

Bank A has over achieved

Bank B has not achieved the
PSL targets
PSL Targets
Bank A can sell PSL Certificates
to Bank B

Sellers and Buyers can transact on e-kuber

platform
PSL Certificates

Bank A has over achieved

Bank B has not achieved the
PSL targets
PSL Targets
Bank A can sell PSL Certificates
to Bank B

Lot Size: The PSLCs would have a standard lot size

of ₹ 25 lakh and multiples thereof.
PSL Certificates

Bank A has over achieved

Bank B has not achieved the
PSL targets
PSL Targets
Bank A can sell PSL Certificates
to Bank B

Accounting Books: Expense for Buyer and

Miscellaneous Income for Seller
PSL Certificates

Bank A may sell PSLCs with a nominal value of ₹100 crores to Bank B on July 15, 2016. Bank B will reckon ₹ 100
crore towards its priority sector achievement as on the reporting dates of September 30, 2016, December 31, 2016
& March 31, 2017, while Bank A will subtract the same from its achievement figures for the respective reporting
dates. The PSLC will expire by March 31, 2017.

Bank C may buy ₹ 100 crore PSLC on March 30, 2017 from Bank D. Bank D will subtract ₹ 100 crore from its PSL
reporting on March 31, 2017 while Bank C will reckon the same towards its achievement. The PSLC will expire by
March 31, 2017
 Q.11

What is the Lot size for trading of PSL Certificates?

1. 10 lakh
2. 15 Lakh
3. 20 Lakh
4. 25 lakh
5. 30 lakh
 Q.12

Which of the following is not a category of PSL Certificate?

1. PSL Certificate for Agriculture

2. PSL Certificate for Small Farmer and Marginal Farmer
3. PSL Certificate for MSME
4. PSL Certificate for Social Infrastructure
5. PSL Certificate for Overall Targets under PSL
Thanks