Page 37 - Banking Finance March 2025
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also be one of the key criteria for the sector to be eligible advocated for broadening of PSL priorities to include
for the priority sector lending. The current criteria of 13.5% emerging and high-impact sectors that align with India's
to direct agri under current framework makes it some times long-term growth ambitions.
difficult for the banks to achieve in its right spirit in the
want of viable and bankable financing opportunity. Historically the menace of Non performing asset(NPA) has
been quite acute in the priority sector domain however in
The current Agriculture segment is more skewed towards last few years lot of cleansing has taken place across the
preharvest lending while considering the current volatility banks and banks are in their best of their time in terms of
of agri commodities due to the geopolitical reasons, their stressed asset portfolio. The Gross NPA and Net NPA
regulatory policies and Exim regulation requires revision of as percentage of the total advance portfolio has significantly
the current PSL limit for post harvest loans. Newly proposed reduced due to higher provisioning coverage ratio and
Credit Guarantee Scheme for eNWR-based Pledge Financing strong revival cum recovery measures unfolded by the
(CGS-NPF) which aims to promote post-harvest financing Insolvency and Bankruptcy code(IBC) and Changes in
options for farmers by creating more secure and SARFAESI act.
transparent agricultural economy can turn out to be
This is the right time that appropriate changes are
effective conduit toward enhancing post harvest finance
undertaken in the PSL framework to make it more attuned
proportion in the over all Agri lending portfolio.
to the current necessity and making the PSL segment more
economically viable and financially bankable for banks to fund.
Although periodically RBI keeps revising the limits for the
existing sector but for the addition of new sector or industry The importance of these changes become much more
detailed recommendation of the committee set forth for the paramount when nation is aiming to achieve its vision of
purpose is invariably required. Recently many industry Viksit Bharat 2047, PSL allocations may be key in the
forums have echoed the similar voices and have strongly evolving priorities of a rapidly changing economy.
RBI injects $10 billion via currency swap to ease liquidity deficit
in financial system
The Reserve Bank of India (RBI) injected $10 billion through a currency or foreign-exchange swap auction, stepping
up efforts to ease one of the worst liquidity deficits to hit the country's financial system. According to Bloomberg, the
infusion takes the amount poured into the banking system to $47 billion in February. It is part of RBI's plan to address
the tightness in the money market.
The swap entails the central bank purchasing dollars from banks against the rupees they hold while contracting to sell
the greenback at a future date. When the central bank buys dollars, it injects an equivalent quantum of rupee liquidity.
After the swap's result was announced, the rupee extended losses, with the domestic currency down 0.3 per cent to
87.4900 per dollar.
The cash crunch has been caused partly by the central banks intervention in the foreign exchange market to shield
the rupee from global volatility amid US President Donald Trumps threat to impose tariff hikes. The shortfall in the
market and liquidity crunch hurts an already slowing economy.
Liquidity in the financial system has tightened significantly since late 2024, with the deficit climbing to a 14-year high
of Rs. 3.3 lakh crore in January. Since last month, the RBI has taken several steps to replenish the system with funds,
including auction-based open-market bond purchases worth Rs. 1 trillion ($11.5 billion) and an earlier foreign-exchange
swap worth $5 billion.
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