RBI Issues Draft Guidelines to Categorise Priority Sector Lending Framework Across Banks

On 5 November 2026, the Reserve Bank of India (RBI) released draft directions that split its priority sector lending (PSL) rules into five separate sets. One set each covers commercial banks, small finance banks, regional rural banks, local area banks and urban co-operative banks. According to the Economic Times (ETBFSI), the overall PSL lending targets stay the same.

What priority sector lending means

Priority sector lending is a rule that asks banks to lend a set share of their credit to sectors the RBI treats as priority. These include agriculture, micro, small and medium enterprises, and weaker sections. The RBI sets the targets and decides which loans count toward them.

What changes in the draft

The change is in the structure of the rules. Today the rules sit in one master direction for all banks. Under the drafts, each bank type reads only the instructions that apply to it. For urban co-operative banks, according to CorpLawUpdates, loans already classified as priority sector advances keep that status until maturity.

Commentators also point to a change for bank lending that runs through NBFCs. Check the exact rule in the draft text before a bank or NBFC acts on it.

Comments close on 26 November 2026

The RBI has invited public comments on the drafts. Comments can be sent through the RBI's Connect 2 Regulate platform or by email. The drafts are not final, so the rules can still change after comments are reviewed.

What this may mean for BFSI jobs

Teams that track priority sector targets will work from five rulebooks instead of one. Credit operations, regulatory reporting and compliance teams at banks will most likely feel this first. Those teams will need to confirm which rulebook applies to each loan product and each partner.

Staff who handle bank tie-ups with NBFCs should read the NBFC part of the draft closely, because it changes how those loans are counted. The overall targets are unchanged, so lending roles that serve priority sectors keep the same goals. This is our reading of the draft, not a measured hiring trend.