State Bank of India (SBI) Research has suggested a major cleanup of the Priority Sector Lending (PSL) rules. PSL refers to the 40% target of a bank's total credit that must go to specific areas like agriculture and small businesses. The report says these rules, which started in 1972, need to be updated to match the 'Viksit Bharat 2047' goal. While banks are meeting their current 40% targets of Adjusted Net Bank Credit (ANBC), the report argues that the current categories are too old for today's economic needs.

The researchers have asked for much higher loan limits in key areas. For example, they want the limit for renewable energy loans to jump from ₹35 crore to ₹100 crore. They also suggest doubling the limit for education loans from ₹25 lakh to ₹50 lakh. Other suggestions include revising limits for housing loans and social infrastructure. This would help bank officers lend larger amounts while still meeting their priority targets. It would also make it easier for customers to get bigger loans for green projects or higher studies.

A major part of the proposal is about infrastructure and climate finance. SBI Research wants infrastructure loans to either get 'priority' status or be removed from the total credit calculation used to decide the PSL target. They also suggested that investments in Green and ESG (Environmental, Social, and Governance) bonds should count as PSL. This would encourage banks to put more money into eco-friendly projects and nationwide building work, which are vital for a modern economy.

The report also talks about helping the weaker sections of society. It recommends that any loans given under government-sponsored schemes should automatically count as lending to micro-enterprises or weaker sections. Furthermore, it suggests changes to how banks lend to NBFCs (Non-Banking Financial Companies) for the purpose of on-lending. This would help credit reach the deepest parts of the country through smaller lenders who know local customers better.

Bankers should also pay attention to the suggestions regarding the Rural Infrastructure Development Fund (RIDF). Currently, when banks fail to meet their PSL targets, they must put money into RIDF, which pays very low interest. SBI Research says that many banks now prefer buying Priority Sector Lending Certificates (PSLCs) instead. They want the government to reform RIDF interest rates and capital rules to make it more attractive for banks to participate.

For bank aspirants and staff, these suggested changes show where the industry is moving. In the future, banking will likely focus more on climate change, large-scale infrastructure, and higher-value education loans. If the Reserve Bank of India (RBI) accepts these suggestions, it will change how branch managers and credit officers evaluate loan applications. For now, the report serves as a roadmap for what 'Viksit Bharat' banking might look like over the next two decades.