Banking · Priority Sector Lending Guidelines
A bank has extended a loan of 50 crore rupees to a Food Processing unit that sources raw materials directly from farmers. The unit has an annual turnover of 300 crore rupees and investment in plant and machinery of 60 crore rupees. Additionally, the bank provided 20 crore rupees to a state government agency for a slum reclamation project in a metropolitan city. How are these loans categorized under Priority Sector Lending (PSL) rules?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Food Processing is Agriculture; Slum Reclamation is not PSL as it is extended to a government agency.
- 2Food Processing is not PSL eligible (exceeds limits); Slum Reclamation is Housing (PSL eligible).
- 3Food Processing is MSME (Medium Enterprise); Slum Reclamation is Housing (PSL eligible).✓
- 4Food Processing is Agriculture; Slum Reclamation is Housing (PSL eligible).
Correct answer
Food Processing is MSME (Medium Enterprise); Slum Reclamation is Housing (PSL eligible).
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