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SFB loan to MFIs for on-lending to be classified as priority sector lending

The Reserve Bank of Indian has decided to allow the classification of priority sector lending for loans given by small finance banks to micro-finance institutions (MFI) for on-lending to individuals

loans | micro finance | Priority sector lending

IANS  |  Mumbai 

retail loans, lending, banks, cash, banking

The Reserve Bank of Indian has decided to allow the classification of for given by small banks (SFB) to micro-institutions (MFI) for on-lending to individuals.

The decision has been taken to address the liquidity issues of MFIs amid the severe Covid crisis.

During a virtual address on Wednesday, RBI Governor Shaktikanta Das said: "In view of the fresh challenges brought on by the pandemic and to address the emergent liquidity position of smaller MFIs, SFBs are now being permitted to reckon fresh lending to smaller MFIs (with asset size of up to Rs 500 crore) for on-lending to individual borrowers as "

This facility will be available up to March 31, 2022.

At present, lending by Small Banks (SFBs) to Institutions (MFIs) for on-lending is not reckoned for (PSL) classification.

Bank credit will be permitted up to 10 per cent of the bank's total priority sector portfolio as on March 31, 2021, said an RBI circular.

disbursed under the scheme will continue to be classified under priority sector till the date of repayment or maturity whichever is earlier.




(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: Wed, May 05 2021. 13:36 IST