(MENAFN- KNN India)
SBI Pushes To Include EVs Under Priority Sector Loans
Kolkata, Sept 29 (KNN) State Bank of India (SBI), the leading public sector bank has approached the Reserve Bank of India (RBI) to classify loans to sectors using carbon-reducing technologies as priority sector lending.
It has also sought a lower cash reserve ratio requirement for green deposits, the framework for which was announced by the RBI in April 2023.
The proceeds from green deposits are to be utilised for financing green activities and projects.
Speaking on the sidelines of a CII-organised Banking Colloqium on Thursday, Ashwini Kumar Tewari, managing director (risk, compliance and stressed assets resolution group) said,“We have written to the RBI to give priority sector classification to credit for emission reduction technologies.”
At present, bank loans up to a limit of Rs 30 crore to borrowers to buy solar-based power generators, biomass-based power generators, windmills, micro-hydel plants and for non-conventional energy-based public utilities, such as street lighting systems and remote village electrification, are eligible for priority sector classification.
There is an interest among lenders to include credit for electric vehicles under priority sector lending in a bid to increase credit flow to the sector.
Banks are mandatorily required to have 40 per cent of their adjusted net bank credit as priority sector lending. Priority sector also includes agriculture, MSME, export credit, education, housing, social infrastructure among others.
Tewari said that on the deposit side, SBI has sought exclusion from CRR (cash reserve ratio) for green deposits. Banks are currently required to maintain 4.5 per cent of their Net Demand and Time Liabilities as CRR with the RBI.
“There is a lot of cost attached to it. Why would a normal customer agree to take a lower rate on a green deposit? If CRR is reduced, the cost comes down,” he said.
“In ESG (environmental, social and governance), we are focusing more on the environment part. We will now begin to ask companies on their plans for emission reduction. We will start the process,” Tewari said.
(KNN Bureau)
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