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Ujjivan, ESAF, Equitas, and other small finance bank shares rally up to 6% as RBI eases priority sector lending norms
Shares of small finance banks (SFBs) rallied up to 6% on Monday after the Reserve Bank of India (RBI) eased priority sector lending (PSL) norms, reducing the mandatory requirement by 15 percentage points.
ADVERTISEMENT Among the gainers, ESAF SFB surged 6% to Rs 33.16, followed by Ujjivan SFB, which rose 4% to Rs 50.20. Utkarsh SFB climbed 4%, Equitas SFB gained 4.6%, Suryoday SFB advanced 2%, Jana SFB rose 2.7%, and AU SFB edged up 1%.
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Currently, small finance banks (SFBs) are required to lend 75% of their Adjusted Net Bank Credit (ANBC) or Credit Equivalent of Off-Balance Sheet Exposures (CEOBE)—whichever is higher—to priority sectors such as agriculture, MSMEs, and education. Under the revised norms, this requirement will be reduced to 60% starting from FY26.
From FY26 onward, SFBs will continue to allocate 40% of ANBC or CEOBE to specific sub-sectors under the Priority Sector Lending (PSL) framework, as per existing guidelines. The remaining 20% can be deployed across any PSL sub-sectors where the bank has a competitive edge.
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In March 2025, the RBI revised the Priority Sector Lending (PSL) guidelines to expand loan limits for categories such as housing and education, and similarly reduced the PSL target for urban cooperative banks from 75% to 60%.
ADVERTISEMENT According to the RBI, these changes aim to provide greater operational flexibility to small finance banks while ensuring the continued flow of credit to critical sectors. The revised PSL norms will come into effect from April 1, 2025.
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