RBI’s amendment in PSL rules will benefit banks: Experts

New Delhi: The Reserve Bank of India’s (RBI) changes to the Priority Sector Lending (PSL) rules will benefit banks with housing loan portfolios. It will also increase competition in the renewable energy sector, experts said on Tuesday.

The RBI announced on Monday that it has increased housing loan limits for PSL and also expanded the categories under which loans can be classified as renewable energy loans.

The revised rules will come into effect from April 1. According to a report by ADTV Profit, SBI, HDFC Bank, ICICI Bank and Axis Bank are expected to benefit from the increase in housing loan limits in PSL. HDFC Bank had the largest retail mortgage book at Rs 8.17 lakh crore at the end of the December quarter, followed by SBI with a retail mortgage book of Rs 7.92 lakh crore, ICICI Bank with a retail mortgage book of Rs 4.27 lakh crore and Axis Bank with a retail mortgage book of Rs 1.67 lakh crore.

The renewable energy sector is expected to witness increased competition as the RBI has widened the scope of PSL loans in this category, reports NDTV Profit. Loans up to Rs 35 crore for renewable energy-based power generation, public utilities, street lighting systems and electrification in remote villages will now come under PSL.

For individual households, the loan limit will now be Rs 10 lakh per borrower. “Banks are already competing aggressively to finance renewable energy projects and this move could lead to even more competition for small loans in this sector,” the report said.