RBI Mandates External Audit Certification to Prevent Double-Counting of PSL Exposures

The RBI issues the Reserve Bank of India (Priority Sector Lending – Targets and Classification) Directions, 2025.
The directions mandate external audit certification to prevent double-counting of Priority Sector Lending (PSL) exposures and revise select PSL classifications and targets.

Reserve Bank of India (Priority Sector Lending - Targets and Classification) Directions, 2025

Dimension	Key Details
Issuing authority	Reserve Bank of India (RBI) issues the Reserve Bank of India (Priority Sector Lending - Targets and Classification) Directions, 2025.
PSL coverage	PSL provides for access to credit for vulnerable sections of society and underdeveloped areas.
Enhanced compliance requirement	RBI mandates banks to obtain certification from external auditors.
CAG-empanelled auditors	Certification by CAG-empanelled auditors for specific entities like NCDC.
Audit purpose	The audit mandates that the same underlying loan exposure is not claimed as PSL by both the originating bank and the intermediary (such as an NBFC or Cooperative).
Revised sector target for Small Finance Banks	The PSL target for SFBs comprises 60% of their Adjusted Net Bank Credit (ANBC), revised from 75%.
Inclusion of NCDC for rural credit classification	Loans provided by banks to the National Cooperative Development Corporation (NCDC) for on-lending to cooperative societies are classified as PSL.
Co-lending arrangements	Banks are permitted to enter into co-lending arrangements to meet PSL targets.
Export credit as PSL	Banks are allowed to treat export credit to agriculture and MSMEs as PSL loans.