Home / Business and Economy / RBI Flags PSL Lapses at HDFC, ICICI Banks
RBI Flags PSL Lapses at HDFC, ICICI Banks
19 Jan
Summary
- RBI mandated provisions of Rs 1,283 crore for ICICI and Rs 500 crore for HDFC.
- Banks misclassified agricultural loans, affecting priority sector lending compliance.
- Regulatory action stems from specific directives, not asset quality stress.
The Reserve Bank of India (RBI) has recently identified significant compliance issues concerning priority sector lending (PSL) at major private banks, including HDFC Bank and ICICI Bank. Annual supervisory reviews revealed deficiencies, prompting the RBI to mandate additional provisions. ICICI Bank was directed to make a one-time provision of Rs 1,283 crore, and HDFC Bank was asked to set aside Rs 500 crore.
These directives arose from the over-classification of agricultural loans. The RBI is emphasizing stricter adherence to its definitions for agricultural lending, ensuring that only credit for genuine farm requirements, as per the official scale of finance, qualifies for PSL status. Loans exceeding these thresholds must be reclassified under non-agri categories.
