Loans up to Rs 2 crore to firms involved in farming and allied activities will now be treated as lending for direct agriculture under priority sector lending (PSL) status, thanks to revision of norms by the Reserve Bank of India (RBI).

The central bank on Wednesday made a number of addition and amendments to PSL norms to extend the scope loan distribution to agriculture and weaker sections of the society.

Following the changes, producer companies of individual farmers, co-operatives of farmers in agriculture, partnership firms and companied involved in allied activities like dairy, animal husbandry, fishery, poultry and bee-keeping can avail loans of up to Rs 2 crore from banks under PSL status.

If the limit of loan per borrower crosses the Rs 2-crore limit, then the whole loan would be considered as indirect finance to agriculture.

Under new PSL norms, housing finance companies (HFCs) can also avail loans of up to 2 crore for onward lending for rehabilitation of economically weaker people such as slum dwellers.

The eligibility for loans to HFCs under PSL norms has been limited to 5 per cent of the total priority sector lending of an individual bank.

Commenting about the eased norms, National Housing Bank Chairman R V Verma said, "The relaxed norms give enough space to HFCs to borrow from banks, and the five per cent cap on loans to HFCs is reasonable. HFCs resource position would be improved."

Families with an annual income of less than Rs 120,000 a year will be considered as economically weaker, irrespective of location.