1. What is Priority Sector Lending (PSL)?

Priority sector lending (PSL) is a mandatory requirement for banks to provide a certain percentage of their loans to specific sectors of the economy. The Reserve Bank of India (RBI) identifies these sectors as priority because they are important for the economy’s growth and development but may not have access to credit from other sources. The goal of PSL is to ensure that these sectors receive timely and adequate credit, which can help the economy develop as a whole. It is mandatory credit facilities or loan facilities directed by banks towards sectors that are critical for India’s development, like agriculture, MSMEs, education, and housing.

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