The Reserve Bank on Monday said bank credit to registered NBFCs towards agriculture, MSEs and housing sector up to prescribed limits will be treated as priority sector loans during the next fiscal starting April.
The move will help boost credit disbursement in the targeted segment like agriculture, MSME and housing sector.
After undertaking a review, it has been decided to extend the priority sector classification for bank loans to NBFCs for on-lending for 2020-21, RBI said in a statement.
Further, it said, the existing loans disbursed under the on-lending model will continue to be classified under Priority Sector till the date of repayment/maturity.
“Bank credit to registered NBFCs (other than MFIs) and HFCs for on-lending will be allowed up to an overall limit of five per cent of individual bank’s total priority sector lending cap,” it said.