Bengaluru, June 23 -- Small finance banks like AU Small Finance, Ujjivan, Equitas, Utkarsh, etc, will be in focus today after the Reserve Bank of India announced a key relaxation in its priority sector lending (PSL) norms. In this article, we will understand the details of this announcement and its impact on India's small banking sector.

The Reserve Bank of India (RBI) has cut the mandatory priority sector lending (PSL) requirement for small finance banks from 75 percent to 60 percent of adjusted net bank credit (ANBC).

ANBC is a calculation that is used by both the regulators & banks to determine the amount of credit that should be allocated to priority sectors. PSL norms make it mandatory for the banks to allocate a portion of their l...