Banks may continue to lend to NBFCs for priority sector lending:

The Reserve Bank of India (RBI) on Friday allowed banks, including small financial banks, to continue providing credit facilities to NBFCs for the purpose of lending in certain priority sectors.

The facility of lending to NBFCs by commercial banks and lending to NBFC-MFIs by microfinance banks (SFBs) was available till March 31, 2022 for the purpose of lending in certain priority sectors.

“In order to ensure the continuity of the coordination that has developed between banks and NBFCs in providing credit to specific priority sectors, it has been decided to allow … facilities on an ongoing basis,” the RBI said in a circular.

Bank credit for on-lending to NBFCs, including HFCs, will be allowed to commercial banks up to an overall limit of 5 per cent of the total priority sector credit of an individual bank.

In the case of SFB, loans will be given to NBFC-MFIs (non-banking financial companies – micro finance institutions) and other MFIs (societies, trusts, etc.) who are members of the RBI recognized ‘self-regulatory body’ in the sector. ব্যক্তিগত Approved up to an overall limit of 10 per cent of the total priority sector loans of a private bank

These limits will be calculated by averaging over four quarters of the fiscal year to determine adherence to the cap, the statement said.
According to the circular, SFBs are allowed to lend to registered NBFC-MFIs and other MFIs which have a gross loan portfolio (GLP) of Rs 500 crore as on March 31 of the previous financial year, for on-lending purposes. In the priority sector.