RBI Amendments Report – 19th January 2026 | Priority Sector Lending – Targets and Classification

All Commercial Banks (including RRBs, SFBs, LABs) and Primary (Urban) Co-operative Banks (UCBs).

Modification of existing Master Directions (2025) to incorporate provisions from recently notified separate regulatory circulars. This ensures the PSL Master Directions act as a single point of reference without contradicting standalone notifications issued throughout the prior year.

• Gap Analysis: Compliance teams must conduct a line-by-line comparison of the Amended Directions 2026 against the 2025 Master Directions to identify specific clauses that have been harmonized.
• Policy Update: Update the internal ‘Bank Lending Policy’ to reflect these harmonized clauses.
• Audit Checklist: Revise the internal audit checklist to ensure that superseded instructions are no longer being referenced in credit appraisals.

Scheduled Commercial Banks (SCBs) seeking to expand PSL portfolios via the on-lending model.

The National Cooperative Development Corporation (NCDC) is now formally recognized as an eligible entity under the “On-Lending” provisions. Banks can lend funds to NCDC, which will then be on-lent to the priority sector (likely Agriculture/Cooperatives).

Note: This is subject to “certain specified conditions” (typically involving caps on interest margins, loan sizes, and portfolio seasoning).

• Counterparty Approval: Credit Risk Management Committee (CRMC) to evaluate and onboard NCDC as an approved counterparty/financial intermediary.
• System Configuration: IT Department to create specific product codes for “Loans to NCDC for On-Lending” to ensure these are correctly tagged in the Core Banking System (CBS) for automated PSL reporting (Quarterly/Annual returns).
• Covenant Monitoring: Establish a monitoring mechanism to verify NCDC’s adherence to the “specified conditions” (e.g., end-use verification of the ultimate beneficiaries).
• Limit Setting: Treasury/Credit department to set exposure limits for NCDC distinct from general corporate exposure, earmarked for PSL achievement.

All Banks mandated to file PSL returns.

Technical cleanup of the Master Directions to update outdated references (e.g., replacing references to repealed acts or superseded circulars) and providing specific clarifications on existing ambiguous provisions (details of which would be in the fine print of the Directions).

• Operational Manual Update: Update the Standard Operating Procedures (SOPs) for branch managers and credit officers to remove obsolete references.
• Training: Circulate a “One-Pager” clarification note to Zonal/Regional offices explaining the clarified provisions to prevent misinterpretation during field audits.