RBI proposes ₹100 crore bank loan limit for agriculture infrastructure

The Reserve Bank of India (RBI) has proposed a total approved loan limit of ₹100 crore per borrower, whether an individual or an entity, for agriculture infrastructure through the banking system. According to a report by Business Standard, the RBI has reviewed the existing guidelines related to Priority Sector Lending (PSL) and suggested issuing new guidelines for various regulatory entities, including commercial banks and regional rural banks.

Draft guidelines for commercial banks state that there will be a total limit of ₹4 crore per borrowing unit for crop loans, medium and long-term loans for agriculture and allied activities, as well as loans for pre- and post-harvest activities. Lending to the agriculture sector will include farm credit, agriculture infrastructure, and loans for ancillary activities.

These proposed changes also include an increase in the eligibility limits for education and renewable energy loans. Loans up to ₹25 lakh granted to individuals for educational purposes, including professional courses, will now be eligible for priority sector classification. In the field of renewable energy, bank loans up to ₹35 crore to borrowers such as renewable energy-based power generators and public utilities, including street lighting systems and electrification of remote villages, will be counted under the priority sector. Additionally, for individual households, this limit will be ₹10 lakh per borrower.

Categories under the priority sector include agriculture, MSMEs, exports, education, housing, social infrastructure, and renewable energy. The RBI has also issued separate draft guidelines for small finance banks, local area banks, and regional rural banks. The Reserve Bank has provided time until November 26 for comments and feedback on this draft. This entire process has been undertaken as part of continuous efforts to consolidate various instructions.