RBI issued a circular on Priority Sector Lending - On-lending by Small Finance Banks to NBFC-MFIs

May 05, 2021 | by Avantis RegTech Legal Research Team

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Industry Specific Compliance

The Reserve Bank of India (RBI), on May 05 issued a circular on Priority Sector Lending (PSL) - On-lending by Small Finance Banks (SFBs) to NBFC-MFIs in view of the fresh challenges brought on by the COVID-19 pandemic and to address the emergent liquidity position of smaller MFIs.

Further it has been decided to allow PSL classification to the fresh credit extended by SFBs to registered NBFC-MFIs and other MFIs and which have a ‘gross loan portfolio’ of up to ₹500 crore as on March 31, 2021. 

Furthermore, the dispensation will be valid up to March 31, 2022 and the loans disbursed will continue to be classified under Priority Sector till the date of repayment or maturity whichever is earlier.

However the banks are required to adhere to the conditions prescribed for on-lending under para 21 of Master Directions on PSL dated September 4, 2020.

[Circular No. RBI/2021-22/27]

 


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