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Priority Sector Lending

Priority Sector Lending :
With a view to regulate and encourage the flow of agricultural credit by all scheduled Commercial Banks, the RBI from time to time, issues a number of guidelines /instructions/directives to banks on Priority Sector Lending.

Priority Sector Lending (PSL) programme has been an integral part of the banking policy in India. It is a major public policy intervention through which credit is directed to the sectors of national priorities critical for both employment and equity. The Priority Sector Lending (PSL) programme of India is one among the longest serving directed lending programmes in the world. This scheme is intended to give loans to the important sectors of the economy (agriculture, small scale industries etc.) in such a way to ensure maximum credit flow to the last man in the last village of the country through a strong banking network. The origin of the PSL programme can be traced back to the Credit Policy for 1967-68, when public sector banks were advised to increase their involvement in financing of certain sectors identified as priority sectors in line with the national economic policy. Priority sector lending in its present form was introduced in 1980, when it was also made applicable to private sector banks and a sub-target was stipulated for lending to the “weaker” sections of the society within the priority sector.

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