PSL Norms for Small Finance Banks Cut to 60% of ANBC
Why in the news
RBI gave small finance banks operating flexibility by lowering their priority sector lending target.
Key facts
| Item | Old | New (FY26) |
|---|---|---|
| Overall PSL | 75% of ANBC | 60% of ANBC or off-balance-sheet exposure, whichever is higher |
| Flexible part | 35% | 20% |
Implications
- SFBs can de-risk into LAP, vehicle and personal loans, and loans against shares or mutual funds.
- Diversification cushions large microfinance books.
- Supports SFBs’ move to universal banks; three have applied.
Exam angle
- PSL target: 75% to 60%.
- ANBC: adjusted net bank credit.