RBI Proposes ₹100 Crore Cap on Loans for Agri Infrastructure

RBI proposes a ₹100 crore per-borrower loan limit for agricultural infrastructure under revised priority sector lending norms, inviting stakeholder feedback until November 26, 2026.

The Reserve Bank of India (RBI) has proposed an aggregate loan limit of ₹100 crore per borrower for agricultural infrastructure projects under its revised Priority Sector Lending (PSL) framework. The proposal forms part of the central bank's efforts to consolidate existing lending instructions and establish separate regulatory directions for different categories of banks. The revised framework is intended to improve clarity around eligible lending activities while maintaining credit flows to agriculture and other priority sectors.

The RBI released draft directions covering commercial banks, small finance banks, regional rural banks, local area banks and urban cooperative banks. The proposed ₹100 crore limit would apply to the aggregate sanctioned loans received by a borrower from the banking system for agricultural infrastructure. The eligible activities include the construction of warehouses, market yards, godowns, silos and cold storage facilities, along with soil conservation, watershed development and other supporting agricultural infrastructure.

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The draft also addresses lending for food and agro-processing activities, retaining an aggregate sanctioned limit of ₹100 crore per borrower for priority sector classification. These provisions are expected to support investments in agricultural storage, processing and supply chain infrastructure, which are important for reducing post-harvest losses and improving market access for farmers.

For agricultural credit, the RBI has proposed an aggregate limit of ₹4 crore per borrowing entity for specified loans to corporate farmers, Farmer Producer Organisations (FPOs), partnership firms and cooperatives engaged in agriculture and allied activities. This includes crop loans, medium- and long-term agricultural loans, and financing for pre- and post-harvest activities such as harvesting, grading, spraying and transportation of agricultural produce.

The proposed directions also retain the overall priority sector lending target of 40% of adjusted net bank credit or the credit equivalent of off-balance-sheet exposures, whichever is higher, for commercial banks. The agriculture sub-target remains at 18%, while the targets for micro enterprises and weaker sections continue at 7.5% and 12%, respectively. Regional rural banks will retain an overall priority sector lending target of 75%, while small finance banks and urban cooperative banks will continue with a 60% target.

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Beyond agriculture, the draft includes provisions for education, housing, social infrastructure and renewable energy lending. Education loans of up to ₹25 lakh per borrower, including vocational courses, will qualify for priority sector classification. Loans of up to ₹35 crore for eligible renewable energy projects and ₹10 lakh for individual households will also remain eligible.

The RBI has invited comments and feedback from stakeholders on the draft directions until November 26, 2026. The final directions will be issued after the consultation process, replacing the relevant existing instructions. The proposals are expected to provide banks with a consolidated framework for classifying and monitoring priority sector advances.