RBI strengthens priority sector lending oversight

THE RESERVE BANK of India (RBI) on Monday issued a comprehensive set of amendments to the Priority Sector Lending (PSL) — Targets and Classification Directions, 2025, refining earlier provisioning on how banks compute adjusted net bank credit (ANBC), classify assets, and report PSL exposures.

- FE BUREAU

Effective immediately, the amendments tighten operational clarity, align PSL norms with updated regulatory frameworks, and strengthen oversight on on-lending and credit risk transfer mechanisms.

A key change relates to the computation of ANBC, where the RBI has clarified the treatment of exemptions linked to long-term bonds for infrastructure and affordable housing is now aligned with the Resource Raising Norms Directions, 2025. Banks can issue unsecured, rupee-denominated bonds with minimum maturity of 7 years which is excluded from the cash reserve ratio (CRR) and statutory liquidity ratio (SLR) requirements.

The central bank has also included a detailed formula for calculating incremental advances arising from foreign currency nonresident bank (FCNR-B) and nonresident external (NRE) deposits, capping the ANBC deduction strictly to the incremental eligible deposits and disallowing any deduction if the incremental figure is zero or negative.