RBI Expands LEF Exemptions for PSL Contributions by SCBs

  • Blog|News|FEMA & Banking|
  • < 1 minute
  • By Taxmann
  • |
  • Last Updated on 11 June, 2025

Latest from Taxmann

Large Exposures Framework exemption

Circular No. RBI/2025-26/48 DOR.CRE.REC.27/21.01.003/2025-26; Dated: 09.06.2025

The Reserve Bank of India (RBI) has issued a clarification expanding the scope of exemptions under the Large Exposures Framework (LEF) in relation to Priority Sector Lending (PSL) shortfall contributions.

1. Background – LEF and PSL Shortfall Deposits

Under the Large Exposures Framework, the RBI earlier prescribed that deposits maintained by Scheduled Commercial Banks (SCBs) with NABARD, made on account of shortfall in achieving PSL targets, shall not be considered as exposure for the purpose of calculating limits under the LEF.

2. Expanded Applicability to Other Entities

The RBI has now clarified that this exemption will also apply to similar contributions made by SCBs to:

  • National Housing Bank (NHB)
  • Small Industries Development Bank of India (SIDBI)
  • Any other entity specified by the RBI

This means that PSL shortfall contributions to these institutions will likewise not be included in the computation of exposures under the LEF.

3. Implication for Scheduled Commercial Banks

This clarification provides relief to SCBs by:

  • Preventing artificial inflation of exposure figures due to PSL compliance-related deposits
  • Preserving lending capacity under LEF thresholds
  • Reinforcing RBI’s stance that regulatory contributions for PSL compliance should not affect exposure computations
Click Here To Read The Full Circular

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that’s easy to read and remain consistent across all imprint and digital publications are applied

Leave a Reply

Your email address will not be published. Required fields are marked *

«
»

Everything on Tax and Corporate Laws of India

To subscribe to our weekly newsletter please log in/register on Taxmann.com

Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied