Priority Sector Lending

Industry body CII has proposed reforms in India's Priority Sector Lending (PSL) framework, suggesting inclusion of emerging sectors and high-impact sectors like digital infrastructure, green initiatives, healthcare, and innovative manufacturing. Arguing that current Development Finance Institutions (DFIs) like SIDBI and NaBFID (National Bank for Financing Infrastructure and Development) have their roles cut out as they have earmarked sectors to finance, the chamber also suggested setting up of a high level committee to look at the revision of PSL norms and explore the need for any new DFIs to cater to some of the new and emerging sectors. Priority Sector Lending is a policy tool aimed at ensuring that key sectors crucial to the nation's development receive adequate financial support. Mandated by the Reserve Bank of India (RBI), PSL obligates banks to allocate a specified proportion of their loans to sectors such as agriculture, education, housing, and small industries. The framework

The rating agency also affirmed Yes Bank's "Ba3" long-term (LT) foreign currency (FC) and local currency (LC) bank deposit ratings

In a notification last week, RBI said the lists of districts have been updated after a review. These lists will remain valid until FY 2026-27

Company aims for strategic adjustments to benefit from the anticipated softening of interest rates

Against the aggregate credit flow of Rs 3.75 trillion in FY24, the advances of Rs 5.73 trillion will reflect a year-on-year (Y-o-Y) growth of 52 per cent

The move will reduce the cost of finance and also promote and accelerate the penetration of EVs in the country

The government is considering a proposal to include electric vehicles (EVs) in priority sector lending category, a senior official said on Saturday. "We have received a representation to include EV in priority sector. We will look at reworking the priority sector lending requirements for banks," the official said adding the issue has to be discussed with the Reserve Bank of India. As per RBI guidelines, it is mandatory for banks to extend 40 per cent of their adjusted net bank credit to priority sector. Currently, seven sectors -- agriculture, Micro, Small and Medium Enterprises (MSME), export credit, education, housing, social infrastructure, and renewable energy -- are considered for priority sector lending (PSL). Inclusion of EVs in PSL has the potential to increase investor confidence by providing a market signal of ongoing government commitment to the sector. It can also ensure a swift and equitable transition by providing a mandate for financial institutions to direct credit

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Currently, 8 sectors are eligible to get lending under the PSL mechanism including agriculture, MSMEs, export credit, housing, education, renewables, and social infrastructure sectors

Analysts see the RBI's announcements to be sentimentally positive for the banking sector even as Covid-19 situation remains dynamic

The Reserve Bank of Indian has decided to allow the classification of priority sector lending for loans given by small finance banks to micro-finance institutions (MFI) for on-lending to individuals

Industry body says funding is currently available only for 6-18 months under various schemes

CM Palaniswami says state seems to have been singled out for adverse treatment as all 32 districts (prior to bifurcation) have been categorised as having comparatively high flow of priority credit

Changes in priority sector lending should be revisited

As on Aug 18, education loans outstanding were Rs 59,300 cr against Rs 61,500 cr as on Aug 19, 2016

Tweaking existing guidelines will help align priority sector lending with current realities