An RBI requirement that banks direct a fixed share of their lending to sectors deemed important for inclusive growth but underserved by normal credit, such as agriculture, small enterprises and weaker sections.
- Domestic commercial banks must lend 40 percent of Adjusted Net Bank Credit (ANBC) to priority sectors; sub-targets exist for agriculture (18 percent) and weaker sections (about 12 percent). Verify the latest exact sub-targets.
- Eligible categories include agriculture, micro, small and medium enterprises (MSMEs), education, housing, social infrastructure, renewable energy and export credit.
- Banks falling short must invest the gap in the Rural Infrastructure Development Fund (RIDF) and other funds with NABARD and similar institutions.
- Banks with surplus priority-sector loans can sell Priority Sector Lending Certificates (PSLCs) to banks running a deficit, a market-based way to meet targets.
- A key instrument of concept financial inclusion, it channels credit to farmers and small borrowers.
The 40 percent overall target, the agriculture and weaker-section sub-targets, and the list of eligible sectors are standard banking-and-inclusion facts.
Priority Sector Lending (a credit-allocation rule) versus the CRR and SLR (reserve rules); PSL targets a share of bank credit, not a share of deposits parked with the RBI.
RBI rule that banks lend 40 percent of credit to agriculture, MSMEs and weaker sections; shortfalls go to RIDF, surpluses sold as PSLCs.