Revamping India's Priority Sector Lending for Viksit Bharat 2047

An SBI Research report suggests a comprehensive overhaul of Priority Sector Lending (PSL) guidelines to better align with India's evolving financial landscape and the Viksit Bharat 2047 vision, by focusing on infrastructure, climate finance, and increasing lending limits in key sectors.

An SBI Research report has called for a thorough review of India's Priority Sector Lending (PSL) guidelines to align them with the nation's changing financial needs and the 'Viksit Bharat 2047' vision. The report emphasizes the need to focus more on infrastructure, climate finance, and increasing lending limits across key sectors.

Originally introduced in 1972 to boost credit flow to underserved sectors, the current PSL framework has served its purpose but now requires reforms. The report stresses emerging priorities like ESG financing, sustainable development, infrastructure financing, and the electric vehicle ecosystem. Although banks meet the 40% PSL target of Adjusted Net Bank Credit (ANBC), the framework needs to evolve to support India’s long-term growth ambitions.

The report outlines recommendations such as raising the renewable energy loan limit, revising housing loan limits, and expanding social infrastructure loan limits. It also suggests widening the PSL scope to include infrastructure lending, introduce a category for climate sustainability finance, and allow green and ESG bonds to qualify under PSL. According to SBI Research, these changes would enhance financial inclusion and reflect India's changing development priorities.