Updated on : Wednesday, April 7, 2021, 17:51PM IST
In August 2019, the Reserve Bank of India (RBI) had permitted banks to classify lending to registered non-banking finance companies (NBFCs) as Priority Sector lending (PSL). Now, the banking regulator has decided to extend it by another six months.
During the bi-monetary policy, RBI, Governor, Shaktikanta Das stated this classification will be extended for another six months up to September 30, 2021. This is the third extension by the regulator. In August 2019, when it was announced it was available until March 31, 2020. This dispensation was later extended up to March 31, 2021.
Up to 5 per cent of a bank’s total PSL has to go for on-lending to agriculture, MSME, and housing. “An amount of around Rs 37,000 crore has been lent by banks to NBFCs for on-lending to the specified priority sectors by December 2020,” RBI stated. The regulator stated this extension will ensure continued availability of credit to these sectors to aid faster economic recovery.
Meanwhile, during the policy, the Monetary policy committee (MPC) voted unanimously to keep the repo rate unchanged, stated RBI Governor Shaktikanta Das. He stated the regulator will maintain an accommodative stance as long as necessary to mitigate the impact of the COVID-19 pandemic.
During the monetary policy announcement, RBI Governor Shaktikanta Das stated that small payments bank can now allow individual customers to keep a balance of up to 2 lakh.
“With a view to furthering the financial inclusion and to expand the ability of payments bank to cater to the growing needs of their customers, the current limit on maximum end of day balance of Rs 1 lakh is being increased to Rs 2 lakh per customer with immediate effect,” RBI governor Shaktikanta Das said.
As per the 2014 notification, small payments banks’ individual account holder are allowed to hold a maximum balance of Rs 1 lakh per individual customer.
The regulator stated that based on a review of the performance of payments banks and with a view to encouraging their efforts for financial inclusion and to expand their ability to cater to the needs of their customers, including MSMEs, small traders and merchants, it has been decided to enhance the limit of maximum balance from April 8 onwards.
The Reserve Bank of India (RBI) on Wednesday kept key interest rates on hold and maintained an accommodative policy stance to support economic recovery amid a new wave of COVID-19 cases. “The recent surge in Covid-19 infections has created uncertainty over economic growth recovery. The central bank will remain accommodative as long as necessary to sustain growth on a durable basis,” said RBI Governor Shaktikanta Das after the three-day meeting of its six-member monetary policy committee (MPC).
The repo rate and reverse repo rate thus remain unchanged at 4 per cent and 3.35 per cent respectively.