Daijiworld Media Network – New Delhi

New Delhi, Mar 25: The Reserve Bank of India’s (RBI) recent revision of priority sector lending (PSL) norms is set to benefit banks with substantial housing loan portfolios while also fostering heightened competition in the renewable energy sector, experts observed on Tuesday.

Announced late on Monday, the new guidelines raise loan limits under PSL for housing and broaden the categories eligible for renewable energy lending. These changes will take effect from April 1.

According to a report by NDTV Profit, major banks such as State Bank of India (SBI), HDFC Bank, ICICI Bank, and Axis Bank are poised to gain significantly from the expanded housing loan limits under PSL.

HDFC Bank held the largest retail mortgage portfolio, valued at ?8.17 lakh crore at the end of the December quarter, followed by SBI at ?7.92 lakh crore, ICICI Bank at ?4.27 lakh crore, and Axis Bank at ?1.67 lakh crore.

Under the revised PSL framework, the RBI has categorized housing loans based on population size. Loans up to ?35 lakh in areas with a population of less than 10 lakh, ?45 lakh in regions with a population between 10 lakh and 50 lakh, and ?50 lakh in cities with more than 50 lakh residents will now qualify as PSL.

Experts noted that these adjustments align with rising housing costs rather than encouraging additional borrowing, a move that had been anticipated for some time.

In the renewable energy sector, competition is expected to intensify as the RBI expands PSL eligibility criteria. Loans up to ?35 crore for renewable energy-based power generation, public utilities, street lighting systems, and remote village electrification now qualify under PSL.

For individual households, the loan cap has been set at ?10 lakh per borrower. "Banks are already competing aggressively to finance renewable energy projects, and this move is likely to fuel even more competition, particularly for smaller loans in this sector," the report added.