Govt mulls priority sector lending certificates for banks

lending

Government has proposed to introduce Priority Sector Lending Certificates (PSLCs), on the lines of carbon credit trading, wherein banks can earn premium for exceeding targets.

This will be a part of the government’s “re-orientation” of the priority sector lending schemes where banks are given targets to provide credit to specific sectors, like exports and agriculture.

The changes proposed in the priority sector guidelines are aimed at re-aligning the norms with the significant change in the economic structure, contribution by various sectors to GDP and the demographic profile.

Renewable energy sector is likely to be accorded the priority sector lending status, up to Rs 10 crore loans.

Loans of up to Rs 5 crore for social infrastructure, like schools and health care facilities, drinking water facilities, etc would also be brought under the scheme, for towns of less than 1 lakh population.

To enhance credit to small and marginal farmers, a separate sub limit of up to 8 percent would also be introduced in the PSL for the first time.

Medium enterprises are also proposed to be brought in the ambit of PSL.

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