FINANCIAL INCLUSION AND DEVELOPMENT

This role encapsulates the essence of renewed national focus on Financial Inclusion, promoting financial education and literacy and making credit available to productive sectors of the economy including the rural and MSME sector.

Notifications

(175 kb)
Date : Mar 23, 2020
Priority Sector Lending - Lending by banks to NBFCs for On-Lending

RBI/2019-20/179
FIDD.CO.Plan.BC.No.19/04.09.01/2019-20

March 23, 2020

The Chairman/ Managing Director
Chief Executive Officer
All Scheduled Commercial Banks
(Excluding Regional Rural Banks & Small Finance Banks)

Dear Sir/ Madam,

Priority Sector Lending - Lending by banks to NBFCs for On-Lending

Please refer to our Circular No. FIDD.CO.Plan.BC.07/04.09.01/2019-20 dated August 13, 2019 advising, inter alia, that the bank loans to registered NBFCs (other than MFIs) for on-lending will be eligible for classification as priority sector under respective categories up to March 31, 2020 and will be reviewed thereafter.

2. Accordingly, after undertaking a review, it has been decided to extend the priority sector classification for bank loans to NBFCs for on-lending for FY 2020-21. Further, existing loans disbursed under the on-lending model will continue to be classified under Priority Sector till the date of repayment/maturity.

3. Bank credit to registered NBFCs (other than MFIs) and HFCs for on-lending will be allowed up to an overall limit of five percent of individual bank’s total priority sector lending. Further, banks shall compute the eligible portfolio under on-lending mechanism by averaging across four quarters, to determine adherence to the prescribed cap.

Yours faithfully,

(Gautam Prasad Borah)
Chief General Manager-in-Charge

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