RBI Relaxes PSL Norms for Small Finance Banks

On 20th June 2025, the Reserve Bank of India (RBI) revised the Priority Sector Lending (PSL) requirements for Small Finance Banks (SFBs) with effect from FY 2025–26.

The new rules were issued by the Reserve Bank of India (RBI) under Section 22(1) of the Banking Regulation Act, 1949.

Previous Norms

  • Prior to the issuance of this circular, the SFBs were mandated to allocate 75% (seventy-five per cent) of their Adjusted Net Bank Credit (“ANBC”) to sectors eligible under PSL, through the following RBI’s guidelines:
    1. ‘Guidelines for Licensing of Small Finance Banks in Private Sector’, dated November 27, 2014, and
    2. ‘Guidelines for On-Tap Licensing ....
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