RBI Tightens Priority Sector Lending Norms and Strengthens Oversight Measures

The Reserve Bank of India has tightened Priority Sector Lending (PSL) norms by mandating external auditor certifications from intermediaries such as NBFCs, microfinance institutions, and housing finance companies to prevent double-claiming of loans. The amendments also clarify the computation of adjusted net bank credit and strengthen oversight on on-lending and credit risk transfers. The overall cap on on-lending to intermediaries remains at 5% of the previous year's PSL, with enhanced monitoring to ensure loans serve approved priority sector purposes.