MUMBAI: The Reserve Bank has further tightened the priority sector lending (PSL) norms for international banks by way of directing them to mandatorily create sub-targets so that they lend a portion of their loans to small and marginal farmers as well as micro enterprises from April.
The move, directed at international banks with over 20 branches will affect the likes of Standard Chartered, Citi and HSBC, that have a lot upper branch presence, and will come into drive from the following financial 12 months.
The PSL norms mandate international banks to in the end lend 40 in line with cent of their overall mortgage e-book to the priority sector, comparable to agriculture, rural infra, and MSMEs amongst others from April 2020.
In a notification over the weekend, RBI has stated a sub-target of eight in line with cent of web financial institution credit score, or credit score equivalent quantity of off-balance sheet publicity, whichever is upper, "shall become applicable for foreign banks with 20 branches and above, for lending to MSMEs from FY19."
Another sub-target of seven.50 in line with cent, the usage of the similar criterion, will likely be acceptable to these banks from FY19 for lending to micro enterprises.
But in a partial reduction, the apex financial institution removed the prior situation that only loans of as much as Rs five crore and Rs 10 crore given to MSMEs could be PSL-compliant.
The notification further stated "all bank loans to MSMEs will now qualify under PSL without any credit cap."
According to RBI precedence sector come with medium enterprises, social infrastructure and renewable power, aside from agriculture and other current categories.
It can be famous that PSL has been a bone of competition for international banks these kinds of while, and the latest move will only further anger them as no longer meeting the brand new targets will further prevent them from expanding their branches.
Foreign banks had been bringing up their lack of awareness of the agricultural markets to lend these kinds of years, while RBI has been linking rural growth as a pre-condition for more city presence. And to fulfill their PSL targets, they frequently purchase loans from microfinance and other NBFCs.
However, it can be famous that most massive MNC banks had been winding down their logo presence within the country and feature been focusing more on branchless banking.
According to a November 2017 file by way of the RBI, international banks are slowly lowering their presence within the country. The number of MNC financial institution branches came down from 317 in FY16 to 286 in FY17.
The move, directed at international banks with over 20 branches will affect the likes of Standard Chartered, Citi and HSBC, that have a lot upper branch presence, and will come into drive from the following financial 12 months.
The PSL norms mandate international banks to in the end lend 40 in line with cent of their overall mortgage e-book to the priority sector, comparable to agriculture, rural infra, and MSMEs amongst others from April 2020.
In a notification over the weekend, RBI has stated a sub-target of eight in line with cent of web financial institution credit score, or credit score equivalent quantity of off-balance sheet publicity, whichever is upper, "shall become applicable for foreign banks with 20 branches and above, for lending to MSMEs from FY19."
Another sub-target of seven.50 in line with cent, the usage of the similar criterion, will likely be acceptable to these banks from FY19 for lending to micro enterprises.
But in a partial reduction, the apex financial institution removed the prior situation that only loans of as much as Rs five crore and Rs 10 crore given to MSMEs could be PSL-compliant.
The notification further stated "all bank loans to MSMEs will now qualify under PSL without any credit cap."
According to RBI precedence sector come with medium enterprises, social infrastructure and renewable power, aside from agriculture and other current categories.
It can be famous that PSL has been a bone of competition for international banks these kinds of while, and the latest move will only further anger them as no longer meeting the brand new targets will further prevent them from expanding their branches.
Foreign banks had been bringing up their lack of awareness of the agricultural markets to lend these kinds of years, while RBI has been linking rural growth as a pre-condition for more city presence. And to fulfill their PSL targets, they frequently purchase loans from microfinance and other NBFCs.
However, it can be famous that most massive MNC banks had been winding down their logo presence within the country and feature been focusing more on branchless banking.
According to a November 2017 file by way of the RBI, international banks are slowly lowering their presence within the country. The number of MNC financial institution branches came down from 317 in FY16 to 286 in FY17.
RBI asks MNC banks to create sub-targets to meet PSL norms
![RBI asks MNC banks to create sub-targets to meet PSL norms]()
Reviewed by Kailash
on
March 05, 2018
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