Which category of banks has the highest Priority Sector

Solution

• Regional Rural Banks (RRBs) and Small Finance Banks (SFBs) are mandated to allocate 75% of their ANBC or Credit Equivalent of Off-Balance Sheet Exposure (CEOBE) to Priority Sector Lending. • This is the highest PSL target among all categories of banks. • In contrast: o Domestic SCBs and UCBs typically have 40% PSL targets, o Foreign banks with fewer than 20 branches have lower and differentiated PSL norms, often with exemptions. This higher requirement for RRBs and SFBs reflects their developmental role in promoting financial inclusion and serving underbanked sectors.