The Reserve Bank of India has revised the priority sector lending norms and directed banks to give 8 per cent of the extended loans to small and marginal farmers. Sectors like renewable energy, medium enterprises, and social infrastructure are classified as priority sector and these sectors will get a boost now. The already existing categories are agriculture, micro and small enterprises, export credit, education, and certain categories of housing. As per the norms, any bank that lends up to Rs 10 lakh to a household for solar power and biomass-based generators can classify the loan as priority sector.

RBI has decided to release guidelines for priority sector lending certificates, which will be eligible for classification under priority sector provided the assets are originated by banks.

The foreign banks with less than 20 branches will also have to lend 40% of their net credit to the priority sector like any other commercial bank in India. The RBI has gave them time till the end of fiscal year 2020 to do so.

Large-ticket education loans are also expected to receive a boost. Under the new norms loans, up to Rs 10 lakh, including vocational courses, irrespective of the sanctioned amount, will be reckoned as part of priority sector lending. Overdraft facility under Pradhan Mantri Jan Dhan Yojna (PMJDY) would also be sidered as priority sector lending.