RBI proposes ₹100 crore limit on bank loans for agri infrastructure

The RBI has proposed a ₹100 crore aggregate loan limit per borrower for agricultural infrastructure under revised priority sector lending norms.

The Reserve Bank on Thursday proposed that loans for agricultural infrastructure will be subject to an aggregate sanctioned limit of Rs 100 crore per borrower from the banking system.

As part of the ongoing effort towards consolidation of various instructions, the Reserve Bank of India said it has undertaken a review of the extant guidelines relating to Priority Sector Lending (PSL) and proposes to issue directions on the subject for different regulated entities, including commercial banks and regional rural banks.

A draft direction on commercial banks proposed an aggregate loan limit of Rs 4 crore per borrowing entity for crop loans, medium and long-term loans for agriculture and allied activities, as well as loans for pre- and post-harvest activities.

 

It also said: "Loans for agriculture infrastructure will be subject to an aggregate sanctioned limit of Rs 100 crore per borrower from the banking system." The lending to the agriculture sector will include farm credit (agriculture and allied activities), lending for agriculture infrastructure and ancillary activities.

The draft further said that loans to individuals for educational purposes, including vocational courses, not exceeding Rs 25 lakh, will be considered as eligible for priority sector classification.

Regarding renewable energy, it said bank loans up to a limit of Rs 35 crore to borrowers for renewable energy-based power generators and for renewable energy-based public utilities -- street lighting systems, remote village electrification -- will be eligible for priority sector classification.

For individual households, the loan limit will be Rs 10 lakh per borrower, the draft said.

Agriculture, MSMEs, exports, education, housing, social infrastructure, and renewable energy are among the categories under the priority sector.

The RBI has also issued separate draft directions for small finance banks, local area banks, and regional rural banks. RBI has invited comments and feedback on the drafts by November 26.