More Stories

Informist, Friday, Jun. 20, 2025

 

Please click here to read all liners published on this story

--RBI revises priority sector lending norms for small finance banks 
--RBI: Priority sector lending additional component cut to 20% FY26 from 35% 
--RBI: Priority sector loan additional component cut to 20% for small fin bks 
--RBI: Small fin banks overall priority sector loan aim 60% from FY26
 

 

NEW DELHI – The Reserve Bank of India has eased priority sector lending requirements for small finance banks from the current financial year that started in April.

 

According to the RBI's revised norms, a small finance bank will only have to allocate 20% of its adjusted net bank credit to sub-sectors under the priority sector lending where it has competitive advantage compared to the 35% requirement earlier.

 

Earlier, a small finance bank was required to extend 75% of its adjusted net bank credit to the sectors eligible for classification as priority sector lending by the RBI. While 40% of a small finance bank's adjusted net bank credit had to be allocated to different sub-sectors under priority sector lending as per the extant priority sector lending prescriptions, the bank could allocate the balance 35% to any one or more sub-sectors under the priority sector lending where it has competitive advantage.

 

With the flexible component lowered to 20%, the overall priority sector lending target of a small finance bank comes down to 60% of adjusted net bank credit or credit equivalent of off-balance sheet exposures, whichever is higher, the RBI said.

 

The RBI allows setting up of small finance banks to increase financial inclusion by provision of savings vehicles primarily to unserved and underserved sections of the population. Currently, there are 11 small finance banks in India.

 

Small finance banks also provide credit to small business units, small and marginal farmers, micro and small industries, and other unorganised sector entities, through high technology-low cost operations.  End

 

Reported by Shubham Rana

Edited by Ashish Shirke

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2025. All rights reserved.