RBI opens banks credit for NBFCs to on-lend continuously to priority sector

Bank credit to NBFCs, including HFCs, will be allowed up to an overall limit of 5% of an individual banks total priority sector lending

The Reserve Bank of India (RBI) on Friday decided to allow banks to lend to NBFCs for on-lending to priority sectors on an on-going basis to ensure continuation of the synergies that have been developed between banks and NBFCs in delivering credit to the specified priority sectors. The same holds true for small finance banks who are on-lending to NBFC-MFIs. This facility was earlier allowed till March 31, 2022.

Now, bank credit to NBFCs, including housing finance companies (HFCs), for on-lending to priority sectors will be allowed upto an overall limit of 5 per cent of an individual banks total