New Delhi, July 7 (IANS) Priority Sector Lending limits should be expanded and new categories should be added to ensure credit can meet evolving development priorities in line with Viksit Bharat@2047 goals, a report said on Tuesday.

New areas to be considered for PSL lending include ESG Financing, SDG Commitment, Infrastructure Lending, Financing to EV Ecosystem, etc, report from SBI Research said.

Banks are able to meet the 40 per cent overall target PSL (provisional FY26 estimate indicates overall PSL at 45 per cent of Adjusted Net Bank Credit) and a comprehensive review with the emergence of new areas in lending is necessary, the report said.

The research firm recommended raising current sectoral limits, such as for renewable energy from Rs 35 crore to Rs 100 crore; home loans to Rs 1 crore in metro centres and Rs 75 lakh elsewhere, with intermediated housing loans included under PSL.

Further, it proposed raising limits for education loans from Rs 25 lakh to Rs 50 lakh; social infrastructure loans to Rs 25 crore across all cities; and bank loans to NBFCs for on‑lending to be raised to Rs 25 lakh per borrower for agriculture and Rs 50 lakh for other sectors.

“All infrastructure loans may be given either priority sector status or be exempt from calculation of ANBC for PSL achievement in line with infra bonds raised towards funding of infrastructure and affordable housing,” the report said.

It urged loans under all government sponsored schemes to be classified as Micro Enterprises and weaker sections irrespective of presence of Udyam Registration Number (URN).

Further, it suggested that a separate head ‘Climate Sustainability Finance’ may be created in PSL for activities which contribute to climate sustainability.

“Investments in green bonds/ESG bonds/sovereign bonds, etc. may be permitted for PSL classification,” the report added.

RBI had devised a Priority Sector Lending (PSL) mechanism in 1972 to ensure credit flow to undeserving sectors and it has been revised periodically.

—IANS

aar/pk