May 5, 2021<\/p>\n\n\n\n
The Chairman\/ Managing Director
Chief Executive Officer
Small Finance Banks<\/p>\n\n\n\n
Dear Sir\/Madam,<\/p>\n\n\n\n
Priority Sector Lending (PSL) – On-lending by Small Finance Banks (SFBs) to NBFC-MFIs<\/strong><\/p>\n\n\n\n As per extant guidelines, lending by Small Finance Banks (SFBs) to Micro Finance Institutions (MFIs) for on-lending is not reckoned for priority sector lending (PSL) classification. In view of the fresh challenges brought on by the COVID-19 pandemic and to address the emergent liquidity position of smaller MFIs, it has been decided to allow PSL classification to the fresh credit extended by SFBs to registered NBFC-MFIs and other MFIs (Societies, Trusts etc.) which are members of RBI recognised \u2018Self-Regulatory Organisation\u2019 of the sector and which have a \u2018gross loan portfolio\u2019 of upto \u20b9500 crore as on 31 March 2021, for the purpose of onlending to individuals. Bank credit as above will be permitted up to 10% of the bank\u2019s total priority sector portfolio as on 31 March, 2021.<\/p>\n\n\n\n 2. The above dispensation shall be valid upto March 31, 2022. However, loans thus disbursed will continue to be classified under Priority Sector till the date of repayment\/maturity whichever is earlier. Further, banks will be required to adhere to the conditions prescribed for on-lending under para 21 of our Master Directions on PSL dated September 4, 2020 (updated as on April 29, 2021).<\/p>\n\n\n\n 3. The guidelines shall come into effect from the date of the issuance of this circular.<\/p>\n\n\n\n Yours faithfully<\/p>\n\n\n\n
(Sonali Sen Gupta)
Chief General Manager-in-Charge<\/p>\n\n\n\n