RBI caps bank loans for agricultural infrastructure at ₹100 crore

The Reserve Bank of India on Thursday announced proposed caps on agricultural lending as part of its ongoing consolidation of Priority Sector Lending (PSL) instructions. Under the new framework, loans for agricultural infrastructure will be subject to an aggregate sanctioned limit of ₹100 crore per borrower from the entire banking system.

The central bank has also proposed separate limits for other agricultural credit categories. Crop loans and medium to long-term loans for agriculture and allied activities, along with pre- and post-harvest financing, will be capped at ₹4 crore per borrowing entity on an aggregate basis across all banks.

These proposed directions are part of the RBI's effort to streamline and consolidate various lending guidelines applicable to different regulated entities, including commercial banks, cooperative banks, and regional rural banks. The central bank said it has undertaken a comprehensive review of existing PSL guidelines and intends to issue formal directions to ensure consistency and clarity across the banking system.

The proposed limits aim to ensure equitable access to credit for agricultural infrastructure while maintaining prudential lending standards across the sector. The RBI's move reflects its ongoing commitment to support agricultural development while managing systemic risks in the financial system.