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RBI Revises PSL Target for Urban Co-operative Banks to 60%

Current · Source: Reserve Bank of India · RBI/2024-25/130 · issued 24 Mar 2025 · ~2 min read
Quick answerRBI has revised the overall Priority Sector Lending target for Urban Co-operative Banks to 60% of ANBC or CEOBSE (whichever higher) from FY2024-25 onwards, replacing the earlier phased target of 75% by FY2025-26.
The rule, in the simplest words
How it plays out — a real example

An agri & priority-sector lending officer in Indore, Priya, used to worry about pushing loans to priority sectors to hit a 75% target by next year. Now, with the RBI's new rule, she can relax a bit because the target is fixed at 60% from this year itself. She updates her branch's lending plan to ensure exactly 60% of their loans go to farmers and small businesses, without rushing to lend more.

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

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

❓ Common questions

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.

📜 Read the original circular — full text as issued by RBI
RBI/2024-25/130 DOR.CRE.REC.69/07.10.002/2024-25 March 24, 2025 Primary (Urban) Co-operative Banks other than Salary Earners’ Banks Madam / Dear Sir, Review of Priority Sector Lending (PSL) Target – Urban Co-operative Banks (UCBs) In terms of paragraph 3 of the circular DOR (PCB).BPD.Cir No.10/13.05.000/2019-20 dated March 13, 2020 , read with paragraph 2 of the circular DOR.CRE.REC.18/07.10.002/2023-24 dated June 8, 2023 , UCBs are required to achieve an overall PSL target of 75 per cent of ANBC 1 or CEOBSE 2 , whichever is higher, by FY2025-26, with interim targets of 60 per cent (FY2023-24) and 65 per cent (FY2024-25). 2. On a review, it has been decided that the overall PSL target for UCBs shall stand revised, FY2024-25 onwards, to 60 per cent of ANBC or CEOBSE, whichever is higher. The other provisions contained in the circular DOR.CRE.REC.18/07.10.002/2023-24 dated June 8, 2023 , shall remain unchanged. 3. Instructions contained in this circular supersede the extant relevant instructions as given in Annex to this circular. Yours faithfully, (Vaibhav Chaturvedi) Chief General Manager Annex – Specific paragraphs of certain circulars that stand superseded Sr. No.
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2024-25/130 · issued 24 Mar 2025. The plain-English explanation above is BankPulse’s own independent summary.
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Who does what — compliance checklist
🏦 Branch Manager
  • Communicate the revised target to all relevant branches and credit teams to align loan origination and reporting.
📜 Compliance
  • 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.
  • Ensure compliance with all other unchanged provisions from the June 8, 2023 circular, including sub-targets and reporting requirements.
Grouped from the action items above — a single circular may involve more than one team.
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) other than Salary Earners’ Banks, Credit and risk management teams at UCBs, Priority sector lending monitoring and compliance departments), your first concrete step on “RBI Revises PSL Target for Urban Co-operative Banks to 60%” is: “Update internal PSL target calculations to 60% of ANBC or CEOBSE (whichever higher) for FY2024-25 and onwards.” (RBI issued this 24 Mar 2025).

  1. Circular: RBI/2024-25/130 -- RBI Revises PSL Target for Urban Co-operative Banks to 60%
  2. Issued: 24 Mar 2025
  3. Action required: Update internal PSL target calculations to 60% of ANBC or CEOBSE (whichever higher) for FY2024-25 and onwards.
  4. Action required: Review and adjust lending strategies to ensure priority sector advances meet the revised 60% threshold without overexposure.
  5. Action required: Communicate the revised target to all relevant branches and credit teams to align loan origination and reporting.
  6. Action required: Ensure compliance with all other unchanged provisions from the June 8, 2023 circular, including sub-targets and reporting requirements.
  7. Owner: ____________ Target date: ____________
  8. Board/committee approval needed? Y / N
  9. 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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BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12797&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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