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Agriculture
RBI proposes stricter verification for farm loans and revised PSL calculation norms
✍️ Tripuratimes
🗓 07 Nov 2026, 08:02 PM
👁 29
The Reserve Bank of India has announced plans to tighten verification procedures for agricultural loans and to introduce new guidelines for calculating priority sector lending.
The Reserve Bank of India (RBI) has put forward a set of proposals aimed at strengthening the verification process for farm credit. Under the draft, banks will be required to conduct more rigorous checks on borrowers' land ownership, crop cycles and repayment capacity before sanctioning agricultural loans.
In addition to tighter vetting, the RBI intends to revise the methodology used to calculate priority sector lending (PSL) targets. The new norms are expected to provide a clearer picture of how much credit is flowing to agriculture, micro‑enterprises and other designated sectors.
The central bank has invited feedback from financial institutions and stakeholders before finalising the rules. If adopted, the measures could reshape the way banks assess risk in the farming segment and influence the overall composition of PSL portfolios.
Industry observers note that the proposals come amid concerns about loan defaults in the agricultural sector and the need to ensure that credit reaches genuine borrowers. The RBI has not disclosed a timeline for implementation, pending the consultation process.
In addition to tighter vetting, the RBI intends to revise the methodology used to calculate priority sector lending (PSL) targets. The new norms are expected to provide a clearer picture of how much credit is flowing to agriculture, micro‑enterprises and other designated sectors.
The central bank has invited feedback from financial institutions and stakeholders before finalising the rules. If adopted, the measures could reshape the way banks assess risk in the farming segment and influence the overall composition of PSL portfolios.
Industry observers note that the proposals come amid concerns about loan defaults in the agricultural sector and the need to ensure that credit reaches genuine borrowers. The RBI has not disclosed a timeline for implementation, pending the consultation process.