SME Times News Bureau | 06 Aug, 2020
In a big change in its lending norms, the Reserve Bank of India (RBI)
has given priority sector lending status to start-ups.
This will allow thousands of start-ups functioning in different fields to
access timely and adequate bank credit which otherwise would have been
difficult to get given the risk profile attached to their projects.
Priority Sector Lending (PSL) is a tool 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. Banks have to keep 40 per cent of Adjusted Net Bank Credit towards
PSL.
Giving out the outcome of Monetary Policy Committee (MPC) meeting, RBI governor
Shaktikanta Das said PSL guidelines have been reviewed in view of emerging
national priorities and bring sharper focus on inclusive development and thus,
"An incentive framework is now being put in place for banks to address the
regional disparities in the flow of priority sector credit."
Accordingly, the incentive will work with banks getting higher weightage for
incremental priority sector credit in the identified districts having lower
credit flow, and a lower weightage would be assigned in identified districts
where the credit flow is comparatively higher.
"PSL status is also being given to start-ups; and the limits for renewable
energy, including solar power and compressed bio-gas plants, are being
increased," Das said.