RBI has issued new guidelines related to loans. The general public should be aware of these. Many loan limits, including home loans, have been increased for PCL coverage.
The Reserve Bank of India has amended the loan related rules (New Loan Rules). New guidelines have been issued on priority sector lending, which will be effective from April 1, 2025. RBI has issued a notice in this regard. Revised guidelines on PSL have been issued after a comprehensive review of the existing provisions, taking into account the feedback received from stakeholders. These have been introduced in place of the PCL Guidelines of 2020.
Several loan limits, including home loans, have been increased for PCL coverage. Loans have also been classified under “renewable energy”. Meaning now home loans will be classified on the basis of the size of the city. Under the new rules, cities with a population of more than 50 lakhs will be allowed loans up to Rs 50 lakh, cities with a population of 10 lakh to 50 lakhs will be allowed loans up to Rs 45 lakh and cities with a population of less than 10 lakhs will be allowed loans up to Rs 35 lakh.
These sectors will benefit
These changes are expected to facilitate better targeting of bank loans to priority sectors of the economy. Landing practice and credit flow may improve. Apart from this, the renewable energy sector can also benefit from this. RBI has allowed bank loans up to Rs 35 crore for renewable energy based power generators and public utilities. Banks can give loans up to Rs 10 lakh for domestic solutions related to renewable energy.
What will be the changes?
- The PCL target for urban cooperative banks has been increased to 60% of the loan equivalent of adjusted net bank credit and balance sheet exposure. This can increase the role of public sector banks in funding the priority sector.
- The central bank has also expanded the category of weaker sections. Under the new rules, it has been decided to remove the existing limit on loans given by USB to individual women beneficiaries.
- Banks have also been prohibited from levying inspection charges, loan related/ad hoc service charges on PSL loans up to Rs 50,000.
- Now loans given by banks to NBFCs in exchange of gold jewellery will also not be included in PSL.
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