Page 36 - Banking Finance March 2025

ARTICLE

These targets were set up considering the economic realities revisited in terms of increase in the lending cap. Secondly ,
and requirement of 80s and 90s but since then path breaking there is a dire need to create institutions for training
changes have taken place in our economy which calls for nurses, health technicians, health machine operators, and
transformative changes in the present PSL framework to more broadly for training in basic technology and digital
make it to more relevant to the present economic reality. applications.
For instance Agriculture, which once accounted for over
30% of GDP in the 1990s but now contributes barely 14% Climate change has led to the emergence of new concept
to 15% to the GDP. Despite this shift, the PSL allocation for of green financing which requires huge commitment of
agriculture remains unchanged at 18% that too with greater allocation of funds .Climate adaptation has taken centre
focus on direct agri lending. stage at recently held COP29 at the UN global climate
summit. The acute problem of Green financing is that of
The importance of health and education infrastructure has amount of adaptation finance needed vis a vis the levels of
been sharply recognized post covid which calls for the currently available sources of funds.
greater channelization of funds to this sector .Currently
health is a sub part of the social infrastructure to cover loan The existing limit of Bank loans up to a limit of Rs. 30 crore
up to a limit of Rs. 10 crore per borrower for building health to borrowers for solar based power generators, biomass
care facilities in Tier II to Tier VI centres. This limit is low based power generators, wind mills, micro-hydel plants and
for setting up right size of health facility in smaller cities in for non-conventional energy based public utilities viz. street
the light of prevailing market scenario and also there is a lighting systems, and remote village electrification needs
need for rethinking for making health as full category revision considering the quantum of finance required for
instead of sub sector of social infrastructure. this sector .Electric vehicles (EVs) are now gaining greater
acceptance because of the growing awareness amongst the
Cap of Rs. 5 crore per borrower for Other Social citizens and across the governments of the countries to
infrastructure viz setting up schools, drinking water facilities reduce the carbon emission of fossil fuel based vehicles so
and sanitation facilities, including construction/ as in turn reduce the impact of the climate change.
refurbishment of household toilets, and water
improvements at the household level also needs to be Education cost has increased significantly particularly
technical and Management education. And growing
tendency among the student to pursue higher education
which calls for revision of current cap of Rs. Rs. 20 lakh at
least for few select colleges/Institutions which are
imparting high quality education.

The world as a whole and India in particular is transitioning
towards finding technology led solutions and innovations
which requires greater credit flow to the sectors which have
higher growth potential-such as digital infrastructure, and
innovative manufacturing.

In addition to the inclusion of few new emerging sector in
the PLS framework there is equal requirement for
revamping the existing component of PSL to make it more
exhaustive like Agriculture and MSME to enhance the
threshold for sectors like scientific innovations, adoption of
technology ,Research and development .Additionally
employment generation opportunity for the sector should

32 | 2025 | MARCH | BANKING FINANCE