LEF Exemption Expanded for PSL Shortfall Contributions
No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2025-26/48 · issued 09 Jun 2025 · ~1 min read
Quick answerRBI now exempts contributions to NHB, SIDBI, MUDRA, or any specified entity for PSL shortfall from Large Exposures Framework limits, applicable with immediate effect.
What changed
Previously, only deposits with NABARD for priority sector lending shortfall were exempt from LEF exposure limits. Now, contributions to NHB, SIDBI, MUDRA Ltd., or any other entity specified by RBI for the same purpose are also exempt.
What it means for you
Banks can now park PSL shortfall funds with multiple designated institutions without these amounts counting toward their large exposure limits. This provides more flexibility in managing priority sector compliance and reduces the risk of breaching exposure caps.
Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.
What banks were required to do at the time
Update internal LEF monitoring systems to exclude contributions to NHB, SIDBI, MUDRA, and any RBI-specified entities for PSL shortfall.
Review current PSL shortfall contributions to ensure they are correctly classified as exempt under the amended framework.
Communicate the change to relevant credit risk and compliance teams for immediate implementation.
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn03 Aug 2026, 04:00 IST
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
When does this amendment take effect?
The instruction is applicable with immediate effect from the date of the circular, June 9, 2025.
📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
Repealed byRBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
RBI’s words: “Official withdrawal register entry #40: DOR.CRE.REC.27/21.01.003/2025-26 — "Large Exposures Framework - Amendment in the List of Exempted Exposures" dated June 9, 2025”
📜 Read the original circular — full text as issued by RBI
RBI/2025-26/48
DOR.CRE.REC.27/21.01.003/2025-26
June 9, 2025
All Scheduled Commercial Banks (Excluding Regional Rural Banks)
Madam / Dear Sir,
Large Exposures Framework – Amendment in the list of exempted exposures
Please refer to paragraph 3.1 of the Annex to the circular DBR.No.BP.BC.43/21.01.003/2018-19 dated June 03, 2019 on ‘Large Exposures Framework’ (LEF) in terms of which “deposits maintained with NABARD on account of shortfall in achievement of targets for priority sector lending” are excluded from being considered for exposure limits under LEF.
2. In this connection, it is advised that in addition to NABARD, the above exemption shall also be applicable to contribution made by the scheduled commercial banks to funds with NHB, SIDBI, MUDRA Ltd., or any other entity specified by RBI, on account of shortfall in achievement of targets for priority sector lending.
3. The above instruction is applicable with immediate effect.
Yours faithfully,
(Vaibhav Chaturvedi)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2025-26/48 · issued 09 Jun 2025. The plain-English explanation above is BankPulse’s own independent summary.
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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=12861&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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