Note4Students

From UPSC perspective, the following things are important :

Prelims level: PSL

Mains level: PSL

The RBI has released a revised priority sector lending guidelines to augment funding to segments including start-ups and agriculture.

Bank finance of up to ₹50 crores to start-ups, loans to farmers both for installation of solar power plants for Solarization of grid-connected agriculture pumps and for setting up compressed biogas (CBG) plants have been included as fresh categories eligible for finance under the priority sector.
This has come to align it with emerging national priorities and bring a sharper focus on inclusive development, after having wide-ranging discussions with all stakeholders.
It will enable better credit penetration to credit deficient areas, increase the lending to small and marginal farmers and weaker sections, boost credit to renewable energy, and health infrastructure
The targets prescribed for ‘small and marginal farmers’ and ‘weaker sections’ are being increased in a phased manner.
Higher credit limit has been specified for farmer producer organisations (FPOs)/farmers producers companies (FPCs) undertaking farming with assured marketing of their produce at a pre-determined price.

PSL is an important role given by the (RBI) to the banks for providing a specified portion of the bank lending to few specific sectors like agriculture and allied activities, micro and small enterprises, poor people for housing, students for education and other low-income groups and weaker sections.
This is essentially meant for an all-round development of the economy as opposed to focusing only on the financial sector.
The broad categories of priority sector for all scheduled commercial banks are as under:

JOIN THE COMMUNITY