In the case of eligible priority sector loans to self-help groups/joint liability groups, this limit will be applicable per member and not to the group as a whole
To ascertain the priority sector status of the underlying portfolio purchased via ‘securitisation notes’, banks may rely on a combination of any external auditors’ certification provided by the originating entity such as a non-banking finance company and conduct of sample check by their own staff or by an auditor for the purpose.
The aforementioned norms may be specified in banks’ internal policy, per Reserve Bank of India (Priority Sector Lending – Targets and Classification) (Amendment) Directions, 2026.
These norms come in the wake of the asset quality of PSL originated banks on their own turning out to be much better than that purchased via the securitisation/direct assignment route.
Priority sector
Investments by banks in securitisation notes, representing loans to various priority sector categories, except ‘others’ category, are eligible for classification under the respective categories depending on the underlying assets, subject to certain conditions.
Investment by banks in securitisation notes with loans against gold jewellery originated by NBFCs as underlying, are not eligible for priority sector status.
Bank credit to National Co-operative Development Corporation (NCDC) for on-lending to co-operative societies for purposes and activities as laid down in this master direction will be eligible for classification as PSL under the respective categories.
RBI said no loan related charges (including guarantee fees of credit guarantee schemes), and ad hoc service charges/inspection charges can be levied on priority sector loans up to ₹50,000.
In the case of eligible priority sector loans to self-help groups/joint liability groups, this limit will be applicable per member and not to the group as a whole.
Bank credit to housing finance companies (HFCs), approved by the National Housing Bank for their refinance, for on-lending for the purpose of purchase/construction/reconstruction of individual dwelling units or for slum clearance and rehabilitation of slum dwellers, will be eligible for classification as PSL subject to an aggregate loan limit of ₹20 lakh per borrower, under ‘housing’ category.
Banks have to maintain necessary borrower-wise details of the underlying portfolio and obtain external auditors’ certificates from the HFCs, confirming that on-lending benefit in respect of such loans has not been claimed from any other bank.
Published on January 19, 2026
