Banks for including EVs, Green Hydrogen in priority lending

Banks have pitched for including loans towards electric vehicles and green hydrogen to be classified under the priority sector lending.

“Some lenders made these suggestions during various individual interactions with the Reserve Bank,” said an executive aware of the developments.

Banks are of the opinion that bringing such loans under priority lending list will help plug financing gaps in these sectors and help lenders meet their priority sector lending targets.

“Expanding the PSL category will also help lenders meet their requirements, which they are unable to do presently and are required to buy priority sector lending certificates,” said another executive aware of the matter. Banks are mandated to provide 40% of their adjusted net bank credit to priority sectors.

Last month, the Indian Banks’ Association (IBA) set up a committee to investigate various aspects of sustainable financing and lending with Environmental, Societal and Governance (ESG) issues in focus.

IBA chief executive Sunil Mehta told ET that the banking body will examine the committee’s recommendations and accordingly make a formal representation to the regulator.