Ahead of Budget, CII calls for reforms in PSL framework

The Confederation of Indian Industry (CII) has proposed significant reforms to India's priority sector lending (PSL) framework and suggested the inclusion of emerging and high-growth sectors like green initiatives and digital infrastructure to make it more aligned with the country's long-term developmental goals and evolving economic priorities.

- HARSH KUMAR

The apex industry body has also called for the creation of a high-level committee to review PSL norms while pitching for setting up more Development Finance Institutions (DFIs) to support emerging sectors.

PSL, a key policy tool mandated by the Reserve Bank of India (RBI), ensures banks allocate a portion of their loans to crucial sectors such as agriculture, education, housing, and small industries. This mechanism has been instrumental in ensuring equitable credit distribution and fostering socio-economic development across underserved regions.

The CII pointed out that despite being successful, the PSL framework required recalibration to stay relevant.