The economic research team at State Bank of India (SBI) has suggested that it is time to refresh the Priority Sector Lending (PSL) rules. PSL is a rule where the RBI tells banks to give 40% of their loans to specific groups like farmers and small businesses. These rules were first made in 1972. SBI experts say the old limits do not work anymore because prices for houses and college degrees have gone up.

One big suggestion is about home loans. Currently, for a loan to count as PSL in big cities, the house cannot cost more than ₹63 lakh. SBI wants to raise the loan limit to ₹1 crore in metro cities and ₹75 lakh in other areas. This would help banks meet their targets while helping the middle class buy homes. They also want more student loans to count as PSL. Right now, the limit is ₹25 lakh, but SBI suggests doubling it to ₹50 lakh because education has become very expensive.

Another major point is about green energy. SBI suggests that loans for solar power and clean energy should have much higher limits. They want the limit for individual solar rooftop loans to jump from ₹10 lakh to ₹2 crore. They also recommend starting a new category called 'Climate Sustainability Finance.' This would help India meet its goals for a cleaner environment while giving banks more ways to complete their PSL targets.

SBI also wants to change how infrastructure is handled. They suggested that if a bank uses its own money to fund big projects like roads or bridges, that money should either count as PSL or be removed from the Adjusted Net Bank Credit (ANBC) calculation. ANBC is the total value of loans used to decide how much a bank must give to priority sectors. Reducing this number would make it easier for banks to hit their percentage targets.

For rural and farm areas, the report suggests higher limits for food processing and agri-infrastructure. They want the limit to be ₹200 crore per borrower instead of the current ₹100 crore. They also suggested doubling the limits for building schools and hospitals. For example, they want healthcare loan limits to go from ₹12 crore to ₹25 crore to improve medical facilities in all cities.

Finally, the team touched upon what happens when a bank fails to meet its PSL target. Usually, banks have to put money into the Rural Infrastructure Development Fund (RIDF) managed by NABARD. This money earns very low interest. SBI suggests that these deposits should be treated like 'sovereign deposits' (money held by the government) and should not carry any risk weight. This would help banks maintain their capital ratios more easily.

These changes are aimed at the 'Viksit Bharat' goal of making India a developed nation by 2047. If the RBI accepts these ideas, it will be easier for bank officers to tag loans under the PSL category. Customers will also benefit from better access to cheaper loans for houses, education, and green energy projects. Bankers should watch for the next RBI policy update to see if any of these suggestions become official rules.