Domestic banks as well as foreign banks(with more than 20 branches) have to lend 40% of their total loans to eight priority sectors which consist of agriculture, micro credits, education, social infrastructure and housing so that these unprivileged sections can get credit. To encourage lending to the priority sector, the central bank has introduced the concept of Priority Sector Lending Certificates (PSLC).

Banks can issue four types of PSLCs including three subsector PSLCs- agriculture, small and marginal farmers, micro enterprises and one PSLC for general.

All Priority Sector Lending Certificates(PSLCs) will be valid till March 31st and will expire on April 1st.

RBI launched a platform to enable trading in the priority sector lending certificates (PSLC) through its Core Banking Solution (CBS) portal (e-Kuber). Kuber refers to Lord Kubera – the lord of wealth in Hindu Mythology.

The price of PSLCs will be determined on the basis of demand and supply that will be reflected in the auction under the RBI’s e-Kuber trading platform.

Priority Sector includes 8 different categories.

♦ Agriculture
♦ Micro, Small and Medium Enterprises(MSME)
♦ Export Credit
♦ Education
♦ Housing
♦ Social Infrastructure
♦ Renewable Energy
♦ Others

Loan limit to individuals for education including vocational courses under priority sector is upto Rs.10 lakh.

Scheduled Commercial Banks (SCBs), Regional Rural Banks (RRBs), Local Area Banks (LABs), Small Finance Banks and Urban Co-operative Banks who have originated PSL eligible category loans subject to such regulations as may be issued by the Bank.

Agriculture sector has been classified under three sub-categories namely Farm credit, Agriculture infrastructure and Ancillary activities.

Loans to individuals up to Rs.28 lakh in metropolitan centres and does not exceed Rs.35 lakh.