HDFC, Federal, IndusInd to benefit

Regulations augur well for banks with relatively lower organic PSL generation

- SUBRATA PANDA

The revised priority sector lending (PSL) norms, announced by the Reserve Bank of India (RBI) on Monday, aimed at improving credit flow into sectors like housing and clean energy, among others, will provide relief to some major banks, including HDFC Bank, RBL Bank, Federal Bank, and IndusInd Bank, to meet the targets organically.

The revised norms will come into effect from April 1, 2025.

The PSL guidelines increased several loan limits, including housing loans; broadened the purposes based on which loans may be classified under renewable energy; and expanded the list of eligible borrowers under the category of "weaker sections", while removing the existing cap on loans by urban cooperative banks (UCBs) to individual women beneficiaries.

According to a note by IIFL Capital, the enhanced coverage of the revised guidelines to improve bank credit flow to the priority sectors boosts financial inclusion and makes credit more accessible to weaker sections and women entrepreneurs.