PSBs Seek 2% Climate Finance Sub-Target in PSL
Why in the news
Public-sector banks have asked for a dedicated slice of priority sector lending for climate and transition finance, and for more room to fund renewables and electric vehicles.
Key facts
- Main proposal: a 2% slice of PSL for climate and transition finance.
- Other asks: higher renewable energy limits and inclusion of EV financing.
- EV coverage sought: charging and battery-swapping infrastructure plus commercial fleets.
- Present position: no separate climate or transition sub-target exists under PSL.
| Item | Current or proposed figure |
|---|---|
| Overall PSL target | 40% of ANBC |
| Proposed climate slice | 2% |
| Wind and small hydro limit (proposed) | ₹75 crore |
| Solar PV limit (retained) | ₹35 crore |
| Overall ceiling per borrower | ₹100 crore |
Existing PSL structure
- Overall requirement: 40% of ANBC for scheduled commercial banks.
- Agriculture: 18%, within which 14% for non-corporate farmers and 10% for small and marginal farmers.
- Micro enterprises: 7.5%.
- Weaker sections: 12% covering SC, ST, minority communities and self-help groups.
- The rest covers further eligible areas: export credit, social infrastructure, renewables, education and housing.
What is transition finance
- Lending to high-carbon industries to help them cut emissions.
- Differs from green finance, which funds activity that is already clean.
- Sectors cited: construction, chemicals and fertilisers, and iron and steel.
Related background
- Climate finance taxonomy: announced in Budget 2024-25 and issued in draft by DEA, not yet final.
- India’s target: net zero by 2070.
Exam angle
- Terms to know: PSL, ANBC, transition finance, green finance, climate finance taxonomy.
- Likely statement-based question: no climate sub-target exists at present, though banks proposed 2%.
- Renewable energy is already an eligible PSL category.