Saraswat Cooperative Bank to focus on PSLCs
It was in March 2020 that RBI had ordered UCB (Urban Cooperate Banks) to achieve the PSL (Private Sector Lending) target of 75% of the total advances they will be having, by the year 2024, earlier the target given was 40%. To meet these revised charges, Saraswat Cooperative Bank is planning to set up the purchase of Priority Sector Lending Certificates (PSLC). The first event in the procurement of PSL targets is during March 2021 where 45% is to be achieved, for the following year that is March 2022 about 50% is to be achieved and 60 % is to be accomplished by March 2023, whereas 75% is to be attained by March 2024.
Based on the latest annual reports published by the largest UCB of India, during March 2020 they had a total business of Rs.63,422 crore. This has reduced to 42.30% in the financial year 2020, whereas during the financial year 2019 the total business (deposits and advances) accounted for 45.21% creating a decline of 2.91%.
Saraswat Urban Cooperative Bank was able to pass the PSL target of 40% for the financial year 2020. They have purchased PSLCs averaging Rs.2,300 crore for the year, but there was an increase of Rs.60 crore during the previous financial year.
Loan given by the banks to sectors like agriculture, Micro, Small, and Medium Enterprises (MSMEs), export credit, education, housing, social infrastructure, and renewable energy is included under PSL. It was based on the directions of the Central Bank in March 2020 that the PSL targets of UCBs were shifted to 75% from 40% of their total advances in four stages by the end of March 2024.
Saraswat Bank has formed a special group for monitoring its priority sector achievements. For stimulating small manufactures, they are planning to introduce more low ticket commercial loans. Such loans will help the bank in improving the overall yields of the banks. These loans will help Saraswat Bank to spread over a huge number of small borrowers, thus containing the non-performing assets. PSL percentage adjusted in net bank credit for the past 5 facial years is as follows, 43.52% for the year 2015, 32.72% for the year 2016, 24.94% for the year 2017, 27.25% for the year 2018, 45.21% for the year 2019, and the current financial year, it is 42.3%.