Loan New Rules: New and big instructions related to loans of Reserve Bank of India (RBI) are coming into effect from April 1.
Loan New Rules: The new master directions of the Reserve Bank of India (RBI) will come into effect from April 1, 2025. RBI has introduced new master directions on Priority Sector Lending (PSL), which are coming into effect from the new financial year. These new directions will replace the PSL guidelines of 2020. The aim of these new guidelines is to enhance the financial sector, improve credit flow and ensure fair lending practices.
Big rule related to loan
The housing loan limit has been increased under PSL. This limit has been categorized on the basis of the size of the city. Banks can now give loans up to Rs 50 lakh to cities with a population of more than 50 lakh, Rs 45 lakh to cities with a population of 10 lakh to 50 lakh and up to Rs 35 lakh to small cities with a population of less than 10 lakh (New Loan Rules). RBI has also determined the maximum property cost eligible under PSL. This move will help in reaching the loan to the right beneficiary.
The renewable energy sector is also expected to benefit from these changes. Under PSL, bank loans of up to Rs 35 crore have been allowed for renewable energy based power generators and public utilities. Meanwhile, people can take a loan of up to Rs 10 lakh for domestic solutions related to renewable energy. This move can help India achieve its environmental goals by promoting sustainable finance and green energy investments.
RBI has increased the PSL target for urban cooperative banks (UCBs) to 60% of Adjusted Net Bank Credit (ANBC) or Credit Equivalent of Off-Balance Sheet Exposure (CEOBSE) (whichever is higher). This change strengthens the role of cooperative banks in funding priority sectors. Apart from this, RBI has also expanded the ‘weaker section’ category. Under this, the central bank has removed the limit on loans given by UCBs to individual women beneficiaries.
Read about the new rule in detail
To protect small borrowers, RBI has prohibited banks from imposing loan-related or ad hoc service charges, including inspection charges, on PSL loans up to Rs 50,000. RBI has also clarified that loans given by banks to non-banking financial companies (NBFCs) against gold jewellery will not come under PSL. This will ensure that priority sector funds reach sectors that really need financial support, such as small businesses, agriculture and weaker sections of society.
All loans categorised under the 2020 PSL framework will retain their priority sector classification until maturity. This provision ensures a smooth transition for borrowers and banks as they adjust to the updated norms.
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