New Delhi, March 25 The Reserve Bank of India's (RBI) decision to revise priority sector lending (PSL) norms will benefit banks with a significant housing loan portfolio, while also intensifying competition in the renewable energy sector, experts said on Tuesday.
The RBI announced late on Monday that it has increased loan limits under PSL for housing and expanded the categories under which loans can be classified as renewable energy lending.
The revised guidelines will be effective from April 1.
According to a report by NDTV Profit, banks such as State Bank of India (SBI), HDFC Bank, ICICI Bank, and Axis Bank are expected to gain the most from the increase in housing loan limits under PSL.
HDFC Bank had the largest retail mortgage book at Rs 8.17 lakh crore at the end of the December quarter, followed by the SBI at Rs 7.92 lakh crore, ICICI Bank at Rs 4.27 lakh crore, and Axis Bank at Rs 1.67 lakh crore.
Under the new PSL norms, the RBI has categorised housing loans based on population size. Loans up to Rs 35 lakh in areas with a population of less than 10 lakh, Rs 45 lakh in areas with a population between 10 lakh and 50 lakh, and Rs 50 lakh in cities with more than 50 lakh people will now qualify as priority sector lending.
Experts noted that these changes were expected for some time and that the RBI is simply adjusting to the rising cost of housing rather than encouraging additional spending.
In the renewable energy sector, as per the NDTV Profit report, competition is expected to intensify as the RBI has expanded the scope of PSL loans in this category.
Loans up to Rs 35 crore for renewable energy-based power generation, public utilities, street lighting systems, and remote village electrification will now be eligible under PSL.
For individual households, the loan limit will be Rs 10 lakh per borrower. "Banks are already competing aggressively to fund renewable energy projects, and this move could lead to even greater competition for smaller loans in this sector," the report added.
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