Master Directions - Reserve Bank of India (Priority Sector Lending – Targets and Classification) Directions, 2025
UR
- Applies toCommercial banks (including RRB, SFB and LAB) and urban co-operative banks
- StatusIn force
- ImportanceMUST READ
- IssuedSep 04, 2020
- Last amendedSep 11, 2026 · 3 incorporated
- Length55 points in 5 sections · 5 min read
The four dates on this rule
- PublishedSep 04, 2020The day RBI put this document out.
- Starts to applyMay 5, 2021The day this rule starts to apply, as RBI's own text states it.
- Time to get ready243 daysThe room between the day it was published and the day it starts to apply.
- Last date to actNot statedNo date to act by was found in this document. Other dates may sit inside single paragraphs.
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Numbers to remember
| 40 per cent | A domestic commercial bank must reach 40 per cent of adjusted net bank credit, or of the off-book base when higher. RBI Para 7 |
| 32 per cent | A foreign bank with fewer than 20 branches may count up to 32 per cent as export credit. RBI Para 7 |
| 8 per cent | Not less than 8 per cent must go to some other priority sector. RBI Para 7 |
| 75 per cent | A regional rural bank must reach 75 per cent. RBI Para 7 |
| 15 per cent | For a rural bank, medium enterprises, social infrastructure and renewable energy count only to 15 per cent. RBI Para 7 |
| 18 per cent | The agriculture target is 18 per cent of adjusted net bank credit, or of the off-book base when higher. RBI Para 7 |
| 14 per cent | Within that, 14 per cent is set for non-corporate farmers. RBI Para 7 |
| 10 per cent | Within that again, 10 per cent is set for small and marginal farmers. RBI Para 7 |
| 12 per cent | The weaker sections target is 12 per cent for a commercial bank. RBI Para 7 |
| 60 per cent | An urban co-operative bank must reach 60 per cent overall. RBI Para 7 |
| ₹25 lakh | An education loan of up to ₹25 lakh counts, vocational courses included. RBI Para 12 |
| ₹8 crore | A loan up to ₹8 crore per borrower counts for schools, drinking water and sanitation. RBI Para 14 |
| ₹12 crore | A loan up to ₹12 crore counts for health care in Tier II to Tier VI centres. RBI Para 14 |
| ₹35 crore | A loan up to ₹35 crore counts for renewable energy generation and public utilities. RBI Para 15 |
What it says
Must know
1. Nothing may be netted off
A bank may not deduct provisions or accrued interest from net bank credit here.
2. Forty per cent overall
A domestic commercial bank must reach 40 per cent of adjusted net bank credit, or of the off-book base when higher.
BankPulse example. Suppose a bank's adjusted net bank credit works out to one lakh crore rupees. Priority sector lending must reach 40 per cent of that. That is forty thousand crore rupees. If the off-book base is higher, the bank works on the higher of the two.
3. Small foreign banks
A foreign bank with fewer than 20 branches may count up to 32 per cent as export credit.
4. And eight per cent elsewhere
Not less than 8 per cent must go to some other priority sector.
5. Seventy five for rural banks
A regional rural bank must reach 75 per cent.
6. A cap inside that
For a rural bank, medium enterprises, social infrastructure and renewable energy count only to 15 per cent.
7. Eighteen for agriculture
The agriculture target is 18 per cent of adjusted net bank credit, or of the off-book base when higher.
8. Fourteen for small farmers
Within that, 14 per cent is set for non-corporate farmers.
9. Ten for the smallest
Within that again, 10 per cent is set for small and marginal farmers.
10. Twelve for weaker sections
The weaker sections target is 12 per cent for a commercial bank.
11. Fifteen for rural banks
For a regional rural bank the weaker sections target is 15 per cent.
12. Sixty for co-operative banks
An urban co-operative bank must reach 60 per cent overall.
13. Education loans
An education loan of up to ₹25 lakh counts, vocational courses included.
14. Schools and water
A loan up to ₹8 crore per borrower counts for schools, drinking water and sanitation.
15. Health care in smaller towns
A loan up to ₹12 crore counts for health care in Tier II to Tier VI centres.
16. Renewable energy
A loan up to ₹35 crore counts for renewable energy generation and public utilities.
17. Solar for a household
For an individual household the renewable energy limit is ₹10 lakh per borrower.
18. Artisans and cottage industry
An artisan or cottage industry counts where the individual credit limit is within ₹2 lakh.
19. Women borrowers
An individual woman borrower counts up to ₹2 lakh, and that cap does not apply to co-operative banks.
20. Escaping the moneylender
A person other than a farmer counts up to ₹1 lakh to repay a non-institutional lender.
21. The on-lending cap
On-lending counts only up to 5 per cent of the bank's total priority lending last year.
22. A small shortfall
A shortfall under 5 percentage points earns the bank rate less 2 percentage points.
23. A bigger shortfall
A shortfall of 5 to under 10 percentage points earns the bank rate less 3 points.
24. The largest shortfall
A shortfall of 10 percentage points or more earns the bank rate less 4 points.
25. No charges on small loans
No loan charges may be levied on a priority sector loan up to ₹50,000.
26. One box only
A loan may be classified in only one of the eight categories, never in two.
Do it
1. What this book does
This book says which loans count as priority sector and how much a bank must lend.
2. Both tests must pass
A housing loan must satisfy both the loan limit and the cost of the dwelling.
3. Missing the target costs money
A bank that falls short must place money with development funds as RBI decides.
4. Keep the dates
The bank must record when an application was received, sanctioned, paid or refused.
5. Acknowledge every application
The bank must acknowledge every priority sector loan application it receives.
6. The board sets the clock
The board must fix the time within which the decision is told to the applicant in writing.
7. Watch where the money goes
The bank must have systems to check the loan was used for the approved purpose.
Background
1. Start date
These rules took effect on 1 April 2025.
2. What it replaces
They replace the priority sector Directions of 2020 on the same subject.
3. Who is covered
Every commercial bank is covered, including regional rural, small finance and local area banks.
4. Co-operative banks too
A primary urban co-operative bank is covered, unless it is a salary earners bank.
5. What allied activity means
Allied activity covers dairy, fisheries, poultry, bee-keeping and sericulture.
6. Who is a non-corporate farmer
A non-corporate farmer is an individual farmer, a farmer's proprietorship, or a group of them.
7. Keep the data apart
Group lending counts only where the bank keeps the figures for each kind of borrower apart.
8. What on-lending means
On-lending is a loan to an intermediary that then lends it on for priority sector assets.
9. Words from the Acts
Any other word takes its meaning from the Banking Regulation Act or the RBI Act.
10. Old loans stay eligible
A loan classified under the 2020 rules keeps that classification until it matures.
11. Eight categories
There are eight categories: agriculture, enterprises, exports, education, housing and three more.
12. Measured on the higher base
Targets are worked out on adjusted net bank credit or off balance sheet exposure, whichever is higher.
13. Last year's figure
The base is the figure as on the same date of the preceding year.
14. Weights by district
Credit is weighted by district, to move lending towards places that get less of it.
15. Not for your own staff
A housing loan to the bank's own employee does not count as priority sector.
16. Not if bond funded
A housing loan backed by long term bonds does not count, because those are already excluded.
17. Repairs count too
A loan for repairing a damaged dwelling counts, within its own smaller limits.
18. Who counts as weaker
Weaker sections overlap other categories. Small and marginal farmers are the first named.
19. Averaged over four quarters
The cap is tested by averaging the on-lending portfolio across four quarters of the year.
20. Counted quarter by quarter
Each quarter is watched separately and a simple average of the four decides the year.
21. The interest rate rule
Interest on these loans follows RBI's own directions on interest rates on advances.
22. Per member for a group
For a self help group or joint liability group that limit applies per member.
How this rule has changed
The points above are the rule as it stands today, after every change listed here.
Issued on Sep 04, 2020. This is the date RBI put the rule out.
Changed on Jan 19, 2026.
- Export credit classification. Export credit to farm and micro, small and medium enterprise borrowers counts under their own priority sector groups.
- Housing loan population data. Banks must use Census 2011 Table A-04 urban data to check population based housing loan limits.
- Rural housing loan limit. For homes in villages not in Table A-04, banks must use limits for centres below ten lakh population.
- UCB health care centres. Urban co-operative banks must treat Category D centres with under one lakh people as equal to Tier II to VI.
Changed on Aug 07, 2026.
- Exclude certain advances. Do not count these two types of advances when you work out Adjusted Net Bank Credit.
- Advances against FCNR B. Exclude advances against fresh FCNR (B) deposits raised between June 08, 2026 and September 30, 2026.
- Advances against NRE. Exclude advances against NRE term deposits of three years or more raised between June 19, 2026 and September 30, 2026.
- ANBC exclusion limit. The amount you exclude from Adjusted Net Bank Credit must not be more than eligible FCNR or NRE deposits.
Changed on Sep 11, 2026.
- Earlier end date. For these ANBC breaks, use August 31, 2026 as the last date, not September 30, 2026.
- Effective immediately. Banks must follow this amendment from the date of this circular, without any wait time.