‘Expand priority sector lending’

Business Desk mumbai

India's Priority Sector Lending (PSL) framework should be expanded to match the country's long-term development goals under Viksit Bharat@2047, according to a report released by SBI Research on Tuesday. 

While banks are comfortably meeting the current PSL target, the existing framework needs a comprehensive review to support emerging sectors and future growth priorities. The report highlighted that banks have exceeded the mandatory 40% PSL target, with provisional estimates for FY26 showing overall priority sector lending at around 45% of Adjusted Net Bank Credit.  This, it said, provides room to broaden the scope of PSL without affecting lending performance. The research recommended adding several new sectors under the PSL umbrella, including ESG financing, Sustainable Development Goals-linked lending, infrastructure projects, financing for the electric vehicle ecosystem and climate sustainability initiatives.

It said these areas are becoming increasingly important for India's economic transformation and should receive greater access to bank credit. The report also suggested revising existing lending limits across several categories. It proposed increasing the renewable energy loan ceiling from ₹35 crore to ₹100 crore. Housing loan limits under PSL should be raised to ₹1 crore in metro cities and ₹75 lakh in non-metro areas, while intermediated housing loans should also qualify.  For education, the report recommended doubling the eligible loan limit from ₹25 lakh to ₹50 lakh. It also called for increasing the limit for social infrastructure loans to ₹25 crore across all cities. 

The research further suggested granting priority sector status to all infrastructure loans or excluding such loans from ANBC calculations for PSL compliance.