RBI proposes tighter checks on gold-backed farm loans
In short
The RBI has proposed tighter checks for banks on gold-backed agricultural loans. It also wants changes to how bills discounted under letters of credit are treated.
The report says banks’ PSL requirements could go up.
What the reporting says
The RBI has proposed tighter checks for banks classifying gold-backed agricultural loans as priority sector lending. It also proposed changes to the treatment of bills discounted under letters of credit, which could raise banks’ priority sector lending requirements.
Why it matters
The RBI has proposed stricter checks for banks when they count gold-backed agricultural loans as priority sector lending, and it has proposed changes to the treatment of bills discounted under letters of credit. The changes could increase banks’ PSL requirements and affect lending compliance.