An executive aware of the developments said, “Some of the lenders made these suggestions during separate interactions with the Reserve Bank.”
Banks are of the opinion that such loans are being brought under priority lending The list will help bridge the financing gap in these sectors and help lenders meet their priority sector lending targets.
“Expansion PSL The category will also help the lenders to meet their requirements, which they are currently unable to do and they need to buy priority sector credit certificates,” said another executive aware of the matter. It is mandatory to provide 40% of the adjusted net bank credit to the priority sector.
Last month, the Indian Banks’ Association (IBA) set up a committee to examine various aspects of sustainable financing and lending, focusing on environmental, social and governance (ESG) issues.
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.
“There are various suggestions on issues related to green financing and ESG. A committee of both Indian and foreign lenders has been constituted to evaluate all the issues and best practices,” he said. Role in capacity building.
Currently, loans to eight sectors including agriculture, micro and small medium enterprises, export credit, housing, education, renewable energy and social infrastructure are considered eligible under priority sector lending.
“This will help firms operating in these areas scale up operations,” said Sumit Dhanuka, founder, Electriva, which sets up independent EV charging stations in India.
Experts stress the need to take ‘green wash’ risks into account when defining sustainable finance.
“For example, investing in a business that claims to use recycled materials, when in reality it does not,” said Vivek Iyer, National Leader of Financial Services-Risk, Grant Thornton in India.