What changed
Earlier, UCBs were required to achieve a PSL target of 75% by FY2025-26, with interim targets of 60% for FY2023-24 and 65% for FY2024-25. Now, the overall PSL target has been fixed at 60% from FY2024-25 onwards, superseding the previous phased targets. Other provisions from the June 8, 2023 circular remain unchanged.
What it means for you
This revision provides UCBs with a lower, fixed PSL target of 60%, reducing the pressure to scale up lending to priority sectors aggressively. Banks can now align their lending strategies without needing to reach the earlier 75% target, potentially easing compliance and allowing more flexibility in credit deployment. However, the 60% floor remains a significant commitment, and banks must continue to monitor their PSL portfolio closely.
What you must do
- Update internal PSL target calculations to 60% of ANBC or CEOBSE (whichever higher) for FY2024-25 and onwards.
- Review and adjust lending strategies to ensure priority sector advances meet the revised 60% threshold without overexposure.
- Communicate the revised target to all relevant branches and credit teams to align loan origination and reporting.
- Ensure compliance with all other unchanged provisions from the June 8, 2023 circular, including sub-targets and reporting requirements.
Who it affects
Primary (Urban) Co-operative Banks (UCBs) other than Salary Earners’ Banks, Credit and risk management teams at UCBs, Priority sector lending monitoring and compliance departments
What is the new PSL target for UCBs from FY2024-25?
The overall PSL target is now 60% of Adjusted Net Bank Credit (ANBC) or Credit Equivalent Amount of Off-balance Sheet Exposure (CEOBSE), whichever is higher, effective from FY2024-25.
Does this circular change any other PSL sub-targets or provisions?
No, only the overall PSL target has been revised. All other provisions from the June 8, 2023 circular, including sub-targets for specific categories, remain unchanged.
What happens to the earlier interim targets of 65% for FY2024-25 and 75% for FY2025-26?
Those interim targets are superseded. The new fixed target of 60% applies from FY2024-25 onwards, replacing the phased increase plan.