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RBI Extends PSL Glide Path for Urban Co-op Banks by Two Years

Current · Source: Reserve Bank of India · RBI/2023-24/42 · issued 08 Jun 2023 · ~2 min read
Quick answerRBI has extended the timeline for Urban Co-operative Banks to meet revised Priority Sector Lending targets by two years, now due by March 31, 2026. The glide path for overall PSL and weaker sections sub-targets is relaxed, and shortfall contributions to RIDF are waived for FY21 and FY22.
The rule, in the simplest words
How it plays out — a real example

Rahul, an agri & priority-sector lending officer in Indore, is relieved that the RBI has extended the deadline for UCBs to meet PSL targets. He can now focus on increasing lending to priority sectors without worrying about penalties for shortfalls. Rahul's bank has been working hard to meet the targets, and this extension gives them more time to ramp up their efforts.

What changed

The glide path for achieving the overall PSL target of 75% of ANBC/CEOBSE and the weaker sections sub-target of 12% has been extended by two years, now ending March 31, 2026 instead of March 31, 2024. Additionally, UCBs are not required to contribute to RIDF or other funds for PSL shortfalls during FY21 and FY22; contributions already made can offset FY23 shortfalls.

What it means for you

UCBs get more breathing room to ramp up priority sector lending without penalty, reducing immediate compliance pressure. The waiver of RIDF contributions for earlier years eases liquidity strain, but banks must still meet stepped targets by FY26. This signals RBI's intent to support cooperative banks while maintaining long-term PSL discipline.

What you must do

Who it affects

Primary (Urban) Co-operative Banks (UCBs) excluding Salary Earners’ Banks, UCBs under all-inclusive directions (exempted from RIDF contributions), NABARD, NHB, SIDBI, MUDRA Ltd. (as fund recipients for PSL shortfall)

❓ Common questions

Regulatory timeline

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

What are the new PSL target deadlines for UCBs?

The overall PSL target is 60% of ANBC/CEOBSE by March 31, 2024, 65% by March 31, 2025, and 75% by March 31, 2026. The weaker sections sub-target is 11.50% by FY24, 11.75% by FY25, and 12% by FY26.

Do UCBs have to pay for PSL shortfalls during FY21 and FY22?

No, RBI has waived the requirement to contribute to RIDF or other eligible funds for PSL shortfalls in FY21 and FY22. Any contributions already made can be used to offset FY23 shortfalls, with excess refunded.

Are there any incentives for UCBs that already meet PSL targets?

Yes, RBI has stated that suitable incentives will be announced separately for UCBs that met the prescribed targets as of March 31, 2023.

📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
Extended by Gold Loan Bullet Repayment Limit Doubled for Compliant UCBs
RBI’s words: “Reference is also invited to para 5 of our circular DOR.CRE.REC.18/07.10.002/2023-24 dated June 8, 2023”
📜 Read the original circular — full text as issued by RBI
Notifications - Reserve Bank of India Skip to main content Selected Selected Change Language हिंदी Search the Website Search Home About Us ▼ About Us Organisation & Functions ▶ Organisation Structure Departments Offices Training Establishment ▶ College of Agricultural Banking Reserve Bank Staff College College of Supervisors RBI's Functions and Working Governors Deputy Governors Executive Directors Communication Policy of RBI Sources of Information ▶ Annual Publications Half-yearly Publications Quarterly Publications Monthly Publications Weekly Publications Occasional Publications SDDS NSDP Data Releases Publications available on Subscription General Information RBI History Museum ▶ The RBI Museum RBI Monetary Museum Notification ▼ Notifications Master Directions Master Circulars Amendment Directions Draft Notifications/Guidelines ▶ Draft Notifications/Guidelines Draft Directions (RE-wise) Index To RBI Circulars Standalone Circulars Circulars Withdrawn Press Releases Speeches & Media Interactions ▼ Speeches Media Interactions Memorial Lectures Podcasts Publications ▼ Biennial Annual Half-Yearly Quarterly Bi-monthly Monthly Weekly Occasional Reports Working Papers Legal Framework ▼ Act Rules Regulations Schemes Research ▼ External Research Schemes RBI Occasional Papers Working Papers RBI Bulletin History DRG Studies KLEMS State Statistics and Finances Statistics ▼ Data Releases Database on Indian Economy Public Debt Statistics Regulatory Reporting ▼ List of Returns Data Definition Validation rules/ Taxonomy List of RBI Reporting Portals FAQs of RBI Reporting Portals Home Notifications Notifications ( 362 kb ) Priority Sector Lending (PSL) targets / sub-targets and contribution against shortfall in achievement of PSL targets – Primary (Urban) Co-operative Banks (UCBs) - Extension of time RBI/2023-24/42 DOR.CRE.REC.18/07.10.002/2023-24 June 8, 2023 Primary (Urban) Co-operative Banks other than Salary Earners’ Banks Madam / Dear Sir, Priority Sector Lending (PSL) targets / sub-targets and contribution against shortfall in achievement of PSL targets – Primary (Urban) Co-operative Banks (UCBs) - Extension of time Please refer to para 3 of the circular DOR (PCB).BPD.Cir No.10/13.05.000/2019-20 1 dated March 13, 2020 , and para 5 of Master Direction on Priority Sector Lending (PSL) - Targets and Classification dated September 4, 2020 , in terms of which, a glide path for achieving overall PSL target and sub-target for advances to weaker sections was prescribed till March 31, 2024. 2. As announced in the Statement on Developmental and Regulatory Policies ( para no. 4 Annexed ), in order to address implementational challenges faced by the UCBs and to make the transition non-disruptive, it has been decided to extend the glide path for these PSL targets by an additional period of two years as under: Financial Year ended March 31, 2024 March 31, 2025 March 31, 2026 Overall PSL Target @ 60% of ANBC 2 or CEOBSE 3 , whichever is higher 65% of ANBC or CEOBSE, whichever is higher 75% of ANBC or CEOBSE, whichever is higher Sub-target for advances to weaker sections # , 4 11.50% of ANBC or CEOBSE, whichever is higher 11.75% of ANBC or CEOBSE, whichever is higher 12.00% of ANBC or CEOBSE, whichever is higher @ The targets for March 31, 2023 (at 60 %) shall continue till March 31, 2024. # The sub-target set for March 31, 2023 (at 11.50%) shall continue till March 31, 2024. 3. In terms of para 28 of Master Direction on Priority Sector Lending (PSL) - Targets and Classification dated September 4, 2020 and para 2 of the circular DOR (PCB).BPD.Cir.No.12/09.09.002/2019-20 5 dated April 24, 2020 , all UCBs (excluding those under all-inclusive directions), were advised to contribute to Rural Infrastructure Development Fund (RIDF) established with NABARD and other Funds with NABARD / NHB / SIDBI / MUDRA Ltd., against their PSL shortfall vis-à-vis the prescribed target/ sub-targets, with effect from March 31, 2021. 4. In view of the implementation challenges observed, it has been decided that: UCBs would not be required to contribute to RIDF or other eligible funds for shortfall in PSL target/ sub-targets during Financial Year (FY) 2020-21 and FY 2021-22. UCBs shall contribute to RIDF and other eligible funds against their shortfall in PSL target/ sub-targets vis-à-vis the prescribed targets with effect from March 31, 2023 . Also, in case contribution has been made by any UCB towards the above PSL shortfall during the FY 2020-21 and/ or FY 2021-22, that contribution can be used to offset any shortfall that may have occurred during FY 2022-23. Excess deposit, if any, after offsetting the PSL shortfall during FY 2022-23 will be refunded. 5. Incentives to UCBs meeting the PSL targets shall be announced separately. Yours faithfully, (Manoranjan Mishra) Chief General Manager Annex Extract from Statement on Developmental and Regulatory Policies June 8, 2023 4. Priority Sector Lending (PSL) targets for Primary (Urban) Cooperative Banks (UCBs) The PSL targets for UCBs were revised in 2020. In order to ensure a non-disruptive transition, a glide path was provided till March 31, 2024 to achieve the revised targets. With a view to ease the implementation challenges faced by the UCBs, it has been decided to extend the phase-in time for achievement of the said targets by two years, i.e. upto March 31, 2026. Further, suitable incentives shall be provided to UCBs that have met the prescribed targets as on March 31, 2023. Detailed circular on the matter will be issued separately. 1 Circular on Limits on exposure to single and group borrowers/parties and large exposures and Revision in the target for priority sector lending – UCBs 2 Adjusted Net Bank Credit 3 Credit Equivalent Amount of Off-balance Sheet Exposure 4 The PSL sub-target for micro enterprises remains unchanged at 7.5% of ANBC or CEBOSE, whichever is higher, with effect from May 10, 2018. 5 Circular on Non-achievement of Priority Sector Lending Targets by Primary (Urban) Co-operative Banks (UCBs) - Contribution to the Rural Infrastructure Development Fund (RIDF) and other funds 2026 All Months January February March April May June July August September October November December 2025 All Months January February March April May June July August September October November December 2024 All Months January February March April May June July August September October November December 2023 All Months January February March April May June July August September October November December 2022 All Months January February March April May June July August September October November December 2021 All Months January February March April May June July August September October November December 2020 All Months January February March April May June July August September October November December 2019 All Months January February March April May June July August September October November December 2018 All Months January February March April May June July August September October November December 2017 All Months January February March April May June July August September October November December Archives 2016 All Months January February March April May June July August September October November December 2015 All Months January February March April May June July August September October November December 2014 All Months January February March April May June July August September October November December 2013 All Months January February March April May June July August September October November December 2012 All Months January February March April May June July August September October November December 2011 All Months January February March April May June July August September October November December 2010 All Months January February March April May June July August September October November December 2009 All Months January February March April May June July August September October November December 2008 All Months January February March April May June July August September October November December 2007 All Months January February March April May June July August September October November December 2006 All Months January February March April May June July August September October November December 2005 All Months January February March April May June July August September October November December 2004 All Months January February March April May June July August September October November December 2003 All Months January February March April May June July August September October November December 2002 All Months January February March April May June July August September October November December 2001 All Months January February March April May June July August September October November December 2000 All Months January February March April May June July August September October November December 1999 All Months January February March April May June July August September October November December 1998 All Months January February March April May June July August September October November December 1997 All Months January February March April May June July August September October November December 1996 All Months January February March April May June July August September October November December 1995 All Months January February March April May June July August September October November December 1994 All Months January February March April May June July August September October November December 1993 All Months January February March April May June July August September October November December 1992 All Months January February March April May June July August September October November December 1991 All Months January February March April May June July August September October November December Top Back to previous page More Links : Bank Holidays Banking Glossary Citizen's Charter Complaints Contact Us COVID-19 Measures E-LMS Events FAQs Financial Education Forms IFSC/MICR Codes Important Websites Opportunities @ RBI RBI Clarifications RBI Kehta Hai RBI’s Vision and Values (1257 kb)--> Right to Information Act Tenders Follow RBI RSS Twitter YouTube Instagram Facebook LinkedIn © Reserve Bank of India. 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Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2023-24/42 · issued 08 Jun 2023. The plain-English explanation above is BankPulse’s own independent summary.
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Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (Primary (Urban) Co-operative Banks (UCBs) excluding Salary Earners’ Banks, UCBs under all-inclusive directions (exempted from RIDF contributions), NABARD, NHB, SIDBI, MUDRA Ltd. (as fund recipients for PSL shortfall)), your first concrete step on “RBI Extends PSL Glide Path for Urban Co-op Banks by Two Years” is: “Update internal PSL target planning to align with the new glide path: 60% by FY24, 65% by FY25, 75% by FY26.” (RBI issued this 08 Jun 2023).

  1. Circular: RBI/2023-24/42 -- RBI Extends PSL Glide Path for Urban Co-op Banks by Two Years
  2. Issued: 08 Jun 2023
  3. Action required: Update internal PSL target planning to align with the new glide path: 60% by FY24, 65% by FY25, 75% by FY26.
  4. Action required: Adjust weaker sections sub-target milestones: 11.50% by FY24, 11.75% by FY25, 12% by FY26.
  5. Action required: Review any RIDF contributions made for FY21-22; offset against FY23 shortfalls if applicable, and claim refunds for excess.
  6. Action required: Monitor PSL achievement quarterly to ensure smooth transition and avoid last-minute shortfalls.
  7. Action required: Prepare for separate incentive announcements from RBI for UCBs meeting targets as of March 31, 2023.
  8. Owner: ____________ Target date: ____________
  9. Board/committee approval needed? Y / N
  10. Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.

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