EAC-PM Suggests Reform in PSL Framework

Recently, the Economic Advisory Council to the Prime Minister (EAC-PM) released paper titled ‘Economic Impact Analysis of Priority Sector Lending(PSL)’.

Issues with the PSL Framework

  • Uneven Credit Distribution: Around 7-8% of districts account for nearly 45-46% of PSL credit, while regions such as the North-East, the Himalayan belt, and eastern India remain inadequately served.
  • Poor Targeting: Priority sector lending is disproportionately concentrated in urban and industrial areas instead of reaching poorer and vulnerable regions.
  • Rigid Lending Norms: The mandatory 40% PSL target constrains banks’ flexibility, lowers efficiency in capital allocation, and often channels credit into low-yield projects.
  • Excessive Reliance on Priority Sector Lending ....
Do You Want to Read More?
Subscribe Now
To get access to detailed content
Buy July 2026 Issue

Already a Member? Login here

Take Annual Subscription and get the following Advantage
The annual members of the Civil Services Chronicle can read the monthly content of the magazine as well as the Chronicle magazine archives.
Readers can study all the material before the last six months of the Civil Services Chronicle monthly issue in the form of Chronicle magazine archives.
Be an Annual Subscriber

Related Content

Reports & Indices