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India considering EVs for priority sector lending, official says

Reuters · 2y ago

India considering EVs for priority sector lending, official says

India's finance ministry is considering a proposal to include electric vehicles (EVs) under the Reserve Bank of India's priority sector guidelines. This move aims to make it cheaper to raise funds for EVs and promote their wider adoption. Currently, priority sector lending guidelines require banks to allocate 40% of their loan book to specified sectors, and including EVs would reduce the cost of finance for them. The proposal was made by the power ministry and will be discussed with the RBI.

Related News

RBI eases priority lending norms for SFBs, unlocks Rs 41,000 cr for low-risk sectors

Economic Times

Economic Times · 2m ago

RBI eases priority lending norms for SFBs, unlocks Rs 41,000 cr for low-risk sectors

The Reserve Bank of India has eased priority sector lending norms for small finance banks (SFBs), lowering the target from 75% to 60% of adjusted net bank credit. This regulatory change is expected to free up approximately ₹41,000 crore, allowing SFBs to redirect funds towards low-risk segments like housing finance. The move aims to help SFBs rebalance their portfolios amid rising non-performing assets and opens opportunities to sell Priority Sector Lending Certificates for better portfolio management.

iSPIRT unveils priority sector lenders' body, to help small businesses

YourStory

YourStory · 7m ago

iSPIRT unveils priority sector lenders' body, to help small businesses

iSPIRT has formed the Priority Sector Lenders Association of India (PSLAI) with members like UGRO Capital and IIFL to enhance loans under Priority Sector Lending norms. Focusing on sectors like MSMEs, PSLAI aims to double credit in this sector to Rs 130 trillion within 3-5 years through digital infrastructure and policy support. Led by Priyashmita Guha, PSLAI seeks to reform policies and unite stakeholders to address PSL challenges.

Karnataka Bank, Clix Capital enter into a co-lending partnership through Yubi Platform

OutlookIndia

OutlookIndia · 1y ago

Karnataka Bank, Clix Capital enter into a co-lending partnership through Yubi Platform

Private sector bank Karnataka Bank and non-banking financial company Clix Capital have formed a strategic digital co-lending partnership. Their collaboration aims to provide loans to the Indian MSME sector in accordance with RBI guidelines on co-lending to priority sectors. Karnataka Bank will bring its digital capabilities, while Clix Capital will provide its lending tech platform. This collaboration will offer affordable liquidity to the MSME sector and assist in its sustainable economic growth. Clix Capital specializes in offering lending solutions to India's SME sector through various financial products.

Nod for voluntary gold pledge may give a boost to micro and agri sector lending

Economic Times

Economic Times · 1m ago

Nod for voluntary gold pledge may give a boost to micro and agri sector lending

The Reserve Bank of India's decision to permit voluntary pledging of gold for loans up to ₹10 lakh aims to enhance priority sector lending in agriculture and micro enterprises. Though banks generally offer these loans without collateral, borrowers often choose to pledge gold to avoid the complexities of collateral-free loans. This change allows banks to categorize such loans as agricultural, potentially boosting compliance with priority sector targets while facilitating easier access to credit for small and marginal farmers.

Shifting gears: Why Redbus is entering the EV financing space

Livemint

Livemint · 1y ago

Shifting gears: Why Redbus is entering the EV financing space

Redbus, the bus aggregator owned by MakeMyTrip, is expanding its lending business to include financing for electric vehicles (EVs). After offering working capital loans to bus operators, Redbus is considering entering the EV financing space. Currently, there is a lack of lending options for EVs due to uncertainty surrounding their residual value and economics. With the EV bus system being virtually non-existent, Redbus sees a billion-dollar opportunity to play a role in market-making for EVs. The company aims to accelerate the adoption of clean energy transport through tailored financial solutions and drive revenue growth in tier-2 and tier-3 towns.

Uday Kotak flags critical banking risk

Business Today

Business Today · 5m ago

Uday Kotak flags critical banking risk

Uday Kotak warns of a critical banking risk arising from banks borrowing at higher rates, around 9%+, while lending at lower rates, about 8.5%, especially after accounting for obligations like Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR), deposit insurance, and priority sector lending requirements. This scenario poses a mismatch in marginal deposit costs versus lending returns, potentially impacting the banks' financial health and sustainability amidst operational expenses not being accounted for.

Declining bank credit to hurt exporters; issue to figure in September 11 meeting with Piyush Goyal

Money Control

Money Control · 11m ago

Declining bank credit to hurt exporters; issue to figure in September 11 meeting with Piyush Goyal

Bank credit to exporters in India has declined, causing concern for the sector. Despite a 15% growth in exports between 2021-22 and 2023-24, outstanding credit dropped by 5% in the same period. The Federation of Indian Export Organisation (FIEO) has raised this issue, calling for the Reserve Bank of India (RBI) to consider setting a sub-target for export credit within the existing priority sector lending (PSL) target. FIEO has also requested pre/post-shipment credit in foreign currency at competitive prices through International Financial Services Centre (IFSC) Banking Units (IBUs).

Demand for creation of new NBFC-PSL category in Budget to boost MSME sector

YourStory

YourStory · 1y ago

Demand for creation of new NBFC-PSL category in Budget to boost MSME sector

Business leaders have put forth their demands for the Union Budget, including the establishment of a new category of Non-Banking Financial Companies (NBFCs) dedicated to priority sector lending (PSL) for Micro, Small, and Medium Enterprises (MSMEs). The CEO of UGRO Capital Ltd, Shachindra Nath, suggested creating an NBFC-PSL category that focuses at least 85% of its assets under management on the priority sector. He also called for the reintroduction of the Partial Credit Guarantee Scheme and the harmonization of the SARFAESI Act limit. Other demands include continued emphasis on infrastructure development and the revival of the interest subvention scheme for exporters.

MSME fintechs steal show as consumer lending loses fizz

Economic Times

Economic Times · 1y ago

MSME fintechs steal show as consumer lending loses fizz

Digital lenders focused on unsecured small business loans are gaining traction as regulatory actions and changes in macroeconomic conditions make unsecured consumer loans less appealing. Companies such as Indifi, Lendingkart, Aye Finance, and Kinara Capital are expected to benefit in the MSME lending space. Large private banks are collaborating with fintechs to tap into the underbanked unsecured business credit market. The simplification of MSME registration allows banks to classify these entities easily for priority sector lending. Delinquency rates have dropped, prompting lenders to shift focus to the MSME sector. Challenges include the need for physical KYC and the cost it incurs for digital lending operations. However, fintechs in this space are showing stronger financials, attracting traditional lenders for co-lending partnerships.

Digital lending company Revfin targets Rs 750 Cr in disbursements for FY26

YourStory

YourStory · 4m ago

Digital lending company Revfin targets Rs 750 Cr in disbursements for FY26

Revfin, a digital lending platform, aims to achieve Rs 750 crore in disbursements by FY2026, focusing on significant growth within the EV financing sector. The company plans to finance 24,000 EVs in FY2025, leveraging partnerships with major firms like Bajaj Auto and Tata Motors. Revfin has announced key leadership appointments to drive this growth. Their strategic shift towards heavier EVs aims to replace traditional internal combustion vehicles, emphasizing people, processes, and profitability for future expansion.

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