Mumbai: Economists at the country's largest lender SBI on Tuesday pitched for a comprehensive review of the priority sector lending (PSL) guidelines, including the classification of infrastructure loans under the mandatory slabs.
Citing the steep surge in PSL Certificates (PSLCs) trading to Rs 12.2 lakh crore in FY25 against Rs 1.8 lakh crore in FY18, the economists noted that, excluding such buys or money parked in the rural infrastructure development fund, no bank is able to fulfil the 40 per cent PSLC target.
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Additionally, a cost-benefit analysis of the Rural Infrastructure Development Fund reveals that banks find it attractive to purchase PSLC compared to investment in RIDF.
However, the biggest focus of the paper was the need to incentivise infrastructure investments through the bank lending channel, especially given national priorities.
"We need huge investments in infrastructure to achieve the PM's vision of 2047. Long-term resources available for the same are limited in the absence of a vibrant bond market," economists said.
The paper pitched for all infrastructure loans to be given priority sector status or be exempt from the calculation of ANBC (adjusted net bank credit) for PSL achievement.
It also suggested tweaks in a slew of other areas, including housing, educational loans and renewable energy.
In the case of housing loans, the paper said, the average amounts are set to increase going ahead, and proposed loan limits to the housing sector may be increased to Rs 1 crore in metros, and Rs 75 lakh for other centres.
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For educational loans, it proposed to double the loan limit for PSL classification to Rs 50 lakh, pointing out that the cost of education is going up.
It also proposed to more than double the limit at which a loan to a renewable energy project qualifies as PSL to Rs 100 crore from the present Rs 35 crore, and hike the individual limit to Rs 2 crore for rooftop solar plants from Rs 10 lakh currently.
