"The committee recommends that the RBI revise the PSL targets and require banks to meet an adjusted PSL target of 50 per cent against the current requirement of 40 per cent," the report said.
It further said that districts and sectors should be weight-based on the difficulty in lending as far as PSL is concerned.
Favouring direct cash transfers to farmers, the panel said, "if the government does desire to provide relief in any form to the small farmer, it would be best carried out as a direct benefit transfer (DBT) to the bank accounts of the farmers and not through the mechanism of either interest subvention or debt waiver."
Making a case for inclusion of loans given to landless labourers and small and marginal farmers as part of direct agriculture, the report said investment by banks in bonds of institutions must qualify for PSL where wholesale lending to the same institutions already qualifies under the PSL norms.
It further said tax-free status of securitisation special purpose vehicles (SPVs) should be restored.
"The RBI should represent to the government to restore the tax-free status of securitisation SPVs as pass-through vehicles for tax treatment so as to create pathways for Wholesale banks to provide liquidity to other banks and financial institutions directly originating assets in priority sectors," the report said.