RBI widens scope for PSL, steeply hikes cap on MSME credit

The Reserve Bank today announced three changes to the priority sector lending norms and more than doubled the limit for MSME advances to the services sector to Rs 5 crore.
In its annual policy statement, the RBI proposed an increase in the loan limit for micro and small enterprises in the services sector to Rs 5 crore per borrower from Rs 2 crore earlier.
Similarly, the regulator also suggested an increase in loan limit to Rs 5 crore from the earlier Rs 1 crore in case of lending to dealers/sellers of fertilisers, pesticides, seeds, cattle and poultry feeds, agricultural implements and other inputs which are classified as indirect finance to the agriculture sector.

The reclassifications of the priority sector lending (PSL) regime have been done based on the feedback received from stakeholders regarding enhancement in certain loan limits to be classified as PSL advances "within the broad contours of the priority sector architecture," the apex bank said.
Governor D Subbarao said detailed guidelines for the same will be issued shortly.
The policy statement also proposed to raise the limit on pledged loans to Rs 50 lakh from the current Rs 25 lakh as direct agricultural lending in the case of individual farmers and as indirect agriculture loans in the case of corporates, partnership firms and institutions engaged in agriculture and allied activities.