What changed
RBI clarified the definition of 'disbursement' for priority sector lending reporting in monthly and yearly formats. For cash credit/overdraft and similar running accounts, disbursement is the lower of debit summation minus interest/charges or the sanctioned limit for the period. For term loans, it is simply debit summation minus interest/charges for the period.
What it means for you
Banks must now use a uniform, precise formula to report disbursements, ensuring consistency across all scheduled commercial banks (excluding RRBs). This reduces ambiguity in PSL data and helps RBI monitor lending accurately. Lenders need to adjust their reporting systems to compute disbursements as per these definitions.
What you must do
- Update your PSL reporting system to calculate disbursement for cash credit/OD as the lower of (debit sum minus charges) or sanctioned limit for each period.
- For term loans, set disbursement as debit summation minus interest and other charges for the reporting period.
- Train reporting staff on these definitions to ensure accurate monthly and yearly submissions.
- Review existing PSL data to align with the new definition and correct any past discrepancies.
Who it affects
All scheduled commercial banks (excluding Regional Rural Banks), Priority sector lending reporting teams, Risk and compliance departments handling PSL data
Does this definition apply to all types of loans under priority sector lending?
The circular specifically covers cash credit/overdraft and similar running accounts, and term loans. Other loan types are not mentioned, so banks should follow existing guidelines for them.
What if the debit summation minus charges is higher than the sanctioned limit for a cash credit account?
In that case, the disbursement reported should be the sanctioned limit, as the definition uses the lower of the two values.
Are Regional Rural Banks exempt from this reporting definition?
Yes, the circular is addressed to all scheduled commercial banks excluding Regional Rural Banks, so RRBs are not required to follow this specific definition.