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Informist, Tuesday, Aug. 18, 2026

 

--Sitharaman:PSU bks must focus on achieving priority sector lending targets 
--Sitharaman: PSU bks must expand credit to farmers growing pulses, oilseeds 
--Sitharaman: Need to plug emerging gaps in priority sector lending

 

NEW DELHI – Indian banks should work towards expanding credit and improving the quality of priority sector lending, Finance Minister Nirmala Sitharaman said Tuesday. "Our public sector banks have historically played an important role in ensuring the flow of institutional credit to the priority sector and advancing financial inclusion," she said at the PSB Confluence 2026. "Credit to farmers, MSMEs (micro, small, and medium enterprises), MUDRA beneficiaries, weaker sections, and disadvantaged communities remains a top priority of our government."

 

Sitharaman told the senior executives of state-owned banks attending the event that "your approach to dealing with priority sector lending should be a lot more robust".

 

At the event, the public-sector banks proposed changes to the existing guidelines for priority sector lending. They also suggested the inclusion of new sub-sectors and emerging priorities into the existing list of sectors benefitted through priority sector lending.

 

For the renewable energy sector, the state-owned banks suggested an overall ceiling of INR 1 billion aggregate per borrower from the banking system. Borrowers can avail loans up to INR 350 million for solar projects and loans of up to INR 750 million for wind and small hydroelectric projects. For the food and agro industry, the limit may be enhanced to INR 2.5 billion in view of the requirement for indexation as well as to align with the revised micro, small, and medium enterprise limits.

 

The banks mooted inclusion of an electric vehicle ecosystem and recommended the extension of benefits under priority sector lending to battery swapping and charging infrastructure. On these recommendations, Sitharaman said, "Addressing the emerging gaps is what I would think should be the essence of the priority sector lending subject."

 

Referring to Prime Minister Narendra Modi's vision of 'Sapt Dhara', the finance minister urged banks to expand credit to farmers growing pulses and oilseeds. "Banks must translate this vision into appropriately designed and targeted agricultural financing," she said. "In particular, they must substantially expand credit to farmers growing pulses and oilseeds, which will reduce India's dependence on imports and help improve soil health and bring Atmanirbharta (self-reliance)."

 

Overall, Indian banks should continue to maintain their focus on achieving priority sector lending targets and sub-targets, the minister said. This requires granular monitoring throughout the year. "The objective should ultimately be to ensure general interest and genuine and productive credit flow to the intended beneficiaries," she added.

 

Priority sector lending should be seen as an opportunity to deepen formal credit, expand the customer base, create stronger enterprises, and support broad-based economic growth, Sitharaman said.

 

Under priority sector lending norms, the Reserve Bank of India has mandated banks to direct a specific portion of their credit to crucial sectors in need of timely and adequate formal financing. Priority sector lending covers is extended to sectors such as agriculture, renewable energy, export credit, education, housing, social infrastructure, and micro, small, and medium enterprises.  End

 

Reported by Priyasmita Dutta and Sagar Sen

Written by Shweta

Edited by Himanshi Gupta

 

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