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Informist, Thursday, Nov. 5, 2026

 

MUMBAI – The Reserve Bank of India has proposed a consolidated framework for priority-sector lending by banks, seeking to streamline existing instructions. The central bank Thursday released draft Priority Sector Lending Directions, 2026, for commercial banks, small finance banks, local area banks, regional rural banks, and urban co-operative banks and invited comments from stakeholders by Nov. 26.

 

The proposed directions are part of the RBI's ongoing exercise to consolidate instructions issued over time. Instructions not incorporated in the consolidated directions will be repealed after the consolidated directions are issued, the central bank said.

 

As per the draft directions, commercial banks will continue to be required to allocate 40% of their adjusted net bank credit or credit equivalent of off-balance-sheet exposures, whichever is higher, towards priority-sector lending. The agriculture lending target has been prescribed at 18% of adjusted net bank credit. Within this, lending to non-corporate farmers will have a sub-target of 14%, including a 10% target for small and marginal farmers. Banks will also have to meet a 7.5% target for micro enterprises and a 12% target for weaker sections.

 

The draft also proposes changes to the computation of adjusted net bank credit, allowing banks to exclude advances extended from fresh foreign currency non-resident (banks) and non-resident external deposits that qualify for exemption from the cash reserve ratio and statutory liquidity ratio requirements. The exclusion will be capped at the outstanding amount of such eligible deposits.

 

The RBI has also specified that incremental priority-sector lending in districts with comparatively lower credit flow will receive a higher weight of 125%, while incremental lending in districts with higher credit flow will receive a lower weight of 90%. 

 

The central bank has also proposed that loans categorised as priority-sector lending under the existing master directions will continue to remain eligible for such classification until maturity. Stakeholders can submit their comments through the 'Connect 2 Regulate' section on RBI's website or by email, with the prescribed subject line, on or before Nov. 26.  End

 

Reported by Kabir Sharma

Edited by Rajeev Pai

 

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