**Summary:**
This Reserve Bank of India (RBI) circular, reference number RBI/2021-22/15 FIDD.CO.Plan.BC.No.8/04.09.01/2021-22, dated April 7, 2021, addresses the classification of Priority Sector Lending (PSL) by banks to Non-Banking Financial Companies (NBFCs) for on-lending. Specifically, it extends the PSL classification for bank loans to registered NBFCs (excluding Micro Finance Institutions) for on-lending to the Agriculture and Micro & Small Enterprises sectors by six months, up to September 30, 2021. This extension aims to ensure the continued availability of credit to these sectors to support faster economic recovery. Bank loans to Housing Finance Companies (HFCs) for on-lending for housing, as per the Master Direction on PSL dated September 4, 2020, will continue on an ongoing basis. Existing loans disbursed under the on-lending model will continue to be classified under PSL until their repayment/maturity date. Circulars FIDD.CO.Plan.BC.7/04.09.01/2019-20 dated August 13, 2019, FIDD.CO.Plan.BC.No.19/04.09.01/2019-20 dated March 23, 2020, and the Master Directions on PSL dated September 4, 2020, remain applicable. For further information, contact Sonali Sen Gupta, Chief General Manager-in-Charge, Financial Inclusion and Development Department, Central Office, at Tel No.: 91-22-22601000 / 22621011 / 22610948 / 22610943 or via email at cgmincfidd@rbi.org.in. The RBI cautions the public against responding to fraudulent communications seeking personal information.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for regulating the banking sector and monetary policy.
Priority Sector Lending: A scheme by Reserve Bank of India, where banks are required to allocate a certain percentage of their lending to specific sectors of the economy, such as agriculture and micro, small and medium enterprises.
NBFCs: Non-Banking Financial Companies. These are financial institutions that provide banking services without holding a banking license.
Micro Small Enterprises: Small and medium sized businesses, a key sector for priority sector lending.
HFCs: Housing Finance Companies. These are financial institutions that specialize in providing loans for housing.
Mumbai, Maharashtra: The city in India where the Central Office of the Reserve Bank of India is located.
Sonali Sen Gupta: Chief General Manager-in-Charge at the Financial Inclusion and Development Department of the Reserve Bank of India.
Regional Rural Banks: Scheduled Commercial Banks that operate in rural areas of India.
भारतीय �रज़व र् ब�क
------------------------------------- RESERVE BANK OF INDIA -----------------------------------
www.rbi.org.in
RBI/2021-22/15
FIDD.CO.Plan.BC.No.8/04.09.01/2021-22 April 7, 2021
The Chairman/ Managing Director
Chief Executive Officer
All Scheduled Commercial Banks
(Excluding Regional Rural Banks, Small Finance Banks, Urban Co-operative Banks
and Local Area Banks)
Dear Sir/Madam
Priority Sector Lending (PSL) - Lending by banks to NBFCs for On-Lending
Please refer to our Circular No. RBI/2019-20/179 FIDD.CO.Plan.BC.No.19/
04.09.01/2019-20 dated March 23, 2020 advising, inter alia, that the bank loans to
registered NBFCs (other than MFIs) for on-lending will be eligible for classification as
priority sector under Agriculture and Micro & Small Enterprises up to March 31, 2021
and will be reviewed thereafter.
2. As announced in the Statement on Developmental and Regulatory Policies dated
April 7, 2021, with a view to ensure continued availability of credit to these sectors to
aid faster economic recovery, it has been decided to extend the PSL classification for
lending by banks to NBFCs for on-lending by six months i.e. up to September 30,
2021. However, bank loans to HFCs for on-lending for the purpose of housing, as
prescribed in para 23 of our Master Direction on PSL dated September 4, 2020, will
continue on an on-going basis. Further, existing loans disbursed under the on-lending
model will continue to be classified under Priority Sector till the date of
repayment/maturity.
3. All other guidelines as issued vide circulars FIDD.CO.Plan.BC.7/04.09.01/2019-20
dated August 13, 2019, FIDD.CO.Plan.BC.No.19/04.09.01/2019-20 dated March 23,
2020 and Master Directions on PSL dated September 4, 2020 will continue to apply.
Yours faithfully
(Sonali Sen Gupta)
Chief General Manager-in-Charge
िव�ीय समावेशन और िवकास िवभाग,क��ीय कायार्लय, 10व� मंिज़ल,क��ीय कायालर् य िब�ल्डगं ,शहीद भगत �सहं माग,र् मुंबई 400 001
टेलीफोन:Tel No.: +912222601000/ फैक्स: +91-22-22621011/22610948/22610943 ईमेल: cgmincfidd@rbi.org.in
Financial Inclusion and Development Department, Central Office,10th Flr, Central Office Building, Shahid Bhagat Singh Marg,Mumbai 400001
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