Govt banks miss PSL targets again

Public sector banks (PSBs) have missed their priority sector lending (PSL) targets once again. According to the Reserve Bank of India (RBI)'s annual report, PSBs could meet only 37.3 per cent of their target in 2015. In 2014, they had met 39.4 per cent of the total target whereas in 2013, state-owned lenders could meet 36.2 per cent of the total target.

According to the regulator's norms, public and private sector banks need to advance 40 per cent of their loans to the priority sector, which includes micro, small and medium enterprises, agriculture, and advances to weaker sections.

In April this year, the regulator had expanded the ambit of PSL by including renewable energy and social infrastructure in it. Apart from this, it had also removed the distinction between direct and indirect agriculture.

This means that banks can meet their entire agriculture lending target under PSL - 18 per cent of their net loans disbursed in the previous year - by funding to indirect agriculture, which includes loans to companies engaged in the agriculture sector.

With these changes, banks believe that meeting the PSL targets would become easier.