A senior official in India’s finance ministry has now told the media that the government is now having various rounds of discussions with the Reserve Bank of India (RBI) so that it can include electric vehicles in the priority-sector lending category as soon as possible.
The official said, “We have received a representation to include EVs in the priority sector lending. We will look at reworking the priority sector lending requirements for banks. It has to be discussed with the RBI. This will be a detailed examination. An entire review will need to be done for priority sector lending. Many sectors are demanding to get added to the PSL.”
Now, the energy sources, which are not traditional such as green hydrogen, green ammonia, and various other renewable sources are having a huge chance to be included beneath in the PSI norms along with electric vehicles. According to the norms of RBI, it is now compulsory for every bank to extend 40 percent of their adjusted net bank credit to the priority sector, according to a report of the Indian Express. Currently, there are seven sectors such as agriculture, Micro, Small and Medium Enterprises (MSME), export credit, education, housing, social infrastructure, and renewable energy are now included in the priority sector lending list.
While speaking of the renewable energy sector, loans from banks upto Rs 30 Crore will be given to the people for the purpose of solar based power generators, biomass-based power generators, wind mills, micro-hydel plants. In fact, the non-traditional based public utilities such as street lighting systems and remote village electrification are eligible for priority sector classification. For each household, the loan limit is maximum of Rs 10 lakh per borrower.
A joint collaboration report by NITI Aayog and Rocky Mountain Institute (RMI), dubbed ‘Banking on Electric Vehicles in India’ had clearly stated why public sector recognition is very important for the electric vehicle sector. It added that both banks and the non-banking financial institutions have the ability to achieve an EV financing market size of Rs 40,000 crore by 2025 and Rs 3.7 lakh crore by 2030.
The Indian Express exclusively reported that electric two-wheelers, three-wheelers, and commercial four-wheelers should be the early segments to prioritize under priority-sector lending stressing on the greater need for formal credit, higher potential for job creation and scale in urban and rural areas, relatively high sales forecasts, greater model availability, and smaller gap to parity in total cost of ownership.
