RBI Grade B Current Affairs — 13 October 2026

A State Bank of India research report has recommended a comprehensive overhaul of Priority Sector Lending guidelines to align with Viksit Bharat 2047 goals. Key proposals include expanding PSL coverage to infrastructure and green finance, raising overall PSL targets, and introducing sub-targets for climate-resilient sectors. Currently, PSL mandates 40% of Adjusted Net Bank Credit for most commercial banks, a framework the report argues is outdated relative to India's current development financing requirements.

Priority Sector Lending (PSL) is a directed-credit policy tool through which the RBI mandates commercial banks to allocate a fixed share of their Adjusted Net Bank Credit (ANBC) or Credit Equivalent of Off-Balance Sheet Exposure, whichever is higher, to sectors deemed nationally important. The current 40% PSL target covers agriculture (18% mandatory sub-target), micro and small enterprises, education, housing, renewable energy, social infrastructure, and export credit, among others.

The SBI report's proposals reflect a tension at the heart of Indian development finance: PSL guidelines were designed primarily in the 1970s–80s to channel credit toward agriculture and the rural poor, but India's financing needs have evolved dramatically. Infrastructure deficit, climate transition, and the Viksit Bharat 2047 ambition require trillions in long-duration, large-ticket lending that current PSL categories neither incentivise nor accommodate.

Including infrastructure and green finance under PSL would, in theory, lower the effective cost of such credit (banks treat PSL as compliance, not additional burden) and scale up flows. Critics, however, argue that large infrastructure projects are not inherently vulnerable borrowers — the rationale for PSL — and that diluting PSL with commercially viable sectors could crowd out smaller, genuinely vulnerable borrowers like marginal farmers and microentrepreneurs.

For exam purposes, understand the transmission mechanism: PSL shortfalls are deposited in RIDF (Rural Infrastructure Development Fund) at NABARD at below-market rates, making non-compliance costly, which incentivises compliance. Any redefinition of eligible categories directly affects NABARD's refinancing pool and rural credit flows.

Finance Minister Nirmala Sitharaman visited Singapore from October 8–11, 2026, meeting senior government officials and financial sector leaders. The visit focused on deepening bilateral financial cooperation, digital payment linkages, and investment flows between India and Singapore. Singapore is one of India's largest foreign direct investment sources and a key ASEAN financial hub. The visit reinforced the India-Singapore Comprehensive Economic Cooperation Agreement framework and explored expanding UPI-PayNow interoperability, which was launched in February 2023.

India-Singapore financial relations rest on several institutional pillars worth understanding for competitive exams.

The Comprehensive Economic Cooperation Agreement (CECA), signed in 2005, was India's first such agreement with an ASEAN nation. It covers goods, services, and investment, and is often cited in exam questions about India's trade treaty history.

Singapore consistently ranks among India's top three sources of FDI — a fact examiners frequently test. The city-state channels significant capital into Indian equities, infrastructure, and startups, partly due to its favourable tax treaty with India (though the India-Singapore Double Taxation Avoidance Agreement was revised in 2016 to close capital gains treaty-shopping loopholes).

The UPI-PayNow linkage, operationalised in February 2023, is a landmark in cross-border retail payment interoperability. It allows users in India and Singapore to transfer money in real time using just a mobile number or UPI ID — the first such bilateral system India activated. RBI and the Monetary Authority of Singapore (MAS) jointly oversee this mechanism.

For UPSC aspirants, the strategic angle matters: Singapore is India's gateway to ASEAN, and the India-ASEAN Free Trade Agreement (in force since 2010) provides the broader trade architecture. For RBI aspirants, the payment system integration and MAS-RBI cooperation framework are the testable core.

The National Scheduled Castes Finance and Development Corporation (NSFDC) offers a Term Loan Scheme providing financial assistance to eligible Scheduled Caste beneficiaries to pursue income-generating activities and achieve economic self-reliance. The scheme targets individuals typically dependent on seasonal or wage labour, channelling concessional credit through State Channelising Agencies (SCAs) to support micro-enterprises and livelihood creation, reducing dependence on informal moneylenders and irregular employment cycles.

The NSFDC Term Loan Scheme sits at the intersection of social welfare and financial inclusion — two pillars examiners across RBI, NABARD, and UPSC consistently test. NSFDC, a Government of India enterprise under the Ministry of Social Justice and Empowerment, was established in 1989 specifically to provide concessional financing to persons from Scheduled Caste communities living below double the poverty line (target group: income up to ₹3 lakh per annum in urban areas and ₹2.5 lakh in rural areas).

The Term Loan Scheme works through a three-tier delivery chain: NSFDC (apex body) → State Channelising Agencies (SCAs, typically state-level SC finance corporations) → individual beneficiaries. This indirect lending model keeps administrative costs low and leverages existing state infrastructure, mirroring how NABARD channels rural credit through RRBs and cooperative banks.

Concessionally priced credit (interest rates significantly below market) is the core tool. By making capital affordable, the scheme converts seasonal wage labourers — whose income is erratic and collateral is minimal — into micro-entrepreneurs with a stable income base. This addresses the classic credit-market failure for low-income, low-collateral borrowers.

From a UPSC lens, this is a governance instrument targeting the intersection of Scheduled Caste welfare and poverty alleviation, linked to Article 46 of the Directive Principles (promotion of educational and economic interests of weaker sections). From NABARD's perspective, rural SC households accessing farm or off-farm enterprise loans fall within priority sector lending norms. For RBI, NSFDC-backed lending through SCAs intersects with financial inclusion targets and the priority sector obligation on banks.