RBI asks banks to declassify off-balance-sheet loans from PSL
Mumbai: The Reserve Bank today said the banks which have included contingent liabilities or off-balance-sheet items as part of their priority sector loans (PSL) will have to declassify these accounts with retrospective effect.
A central bank notification said instances of contingent or off-balance-sheet items as part of the priority sector target achievement have come to its notice, and the banks are advised to declassify them with retrospective effect.
"It has come to notice that some banks have included contingent liabilities/off-balance-sheet items as part of PSL target achievement....We clarify that this is not in conformity with priority sector lending guidelines," it said.
Usually, any loan that doesn't reflect in the balance sheet of a bank is called off-balance-sheet items. Securitised debts are an example of off-balance sheet item.
The central bank also said all types of loans, investments or any other items which are treated as eligible for classification under priority sector target or sub-target achievement should also form part of adjusted net bank credit.