Priority Sector Lending
Financial institutions all over the world usually operate to generate profits. They usually achieve this by investing in various developmental projects or lending to businesses. In case of India, banks and NBFCs (Non-Banking Financial Institutions) usually target big businesses which have a high probability of yielding huge profits. This definitely helps improve business, but it also leads to a divide in society. There becomes a privileged section living in urban areas with proper access to BFSI (Banking, financial services and insurance) while there’s another section deprived or underserved of these privileges who usually live in rural and remote areas. To reduce this divide, Government of India and RBI came up with PSL (Priority Sector Lending) norms for banks. Banks are considered a very reliable source of transaction, deposition and credit in India. So, PSL targets on them could help society very effectively. To meet with their PSL targets, banks have to lend a part of their A...