What changed
The RBI released a new Master Directions on Priority Sector Lending, effective April 1, 2025, replacing the 2020 Directions. All loans previously classified as PSL under the old rules continue to be eligible until their maturity. The document consolidates and updates all prior instructions on PSL targets and classification.
What it means for you
Banks must align their PSL reporting and compliance with the new 2025 framework from April 1, 2025. The continuity provision ensures no disruption for existing loans. Lenders should review updated categories, targets, and on-lending caps to avoid shortfalls.
What you must do
- Review the new PSL Master Directions for changes in categories, targets, and sub-targets.
- Update internal PSL classification and reporting systems to comply from April 1, 2025.
- Ensure all existing PSL loans are grandfathered under the new directions until maturity.
- Train staff on revised definitions and eligible activities under agriculture, MSME, and other sectors.
Who it affects
All commercial banks including RRBs, SFBs, LABs, and Urban Co-operative Banks, Priority sector lending teams and compliance officers, Banks' credit and risk management departments
When do the new PSL Directions take effect?
The Directions come into effect on April 1, 2025, and supersede the 2020 PSL Directions.
Will existing PSL loans be affected?
No, all loans eligible under the old Directions continue to be classified as PSL until their maturity.
What is the scope of these Directions?
They cover all categories under priority sector including agriculture, MSME, export credit, education, housing, social infrastructure, renewable energy, and weaker sections.