SBI Research has urged a comprehensive review of Priority Sector Lending guidelines to align credit policy with India’s evolving financing needs and the Viksit Bharat 2047 vision. It said emphasis should shift to infrastructure, climate finance, renewable energy and higher lending limits. The study noted the framework, introduced in 1972 to boost credit to underserved areas, must adapt to support long term growth.

The paper proposed raising ceilings, including increasing the renewable energy loan limit from Rs 35 crore to Rs 100 crore, equivalent to Rs 350 million (Rs 350 mn) and Rs 1 billion (Rs 1 bn). It suggested increasing the education loan ceiling eligible for PSL from Rs 25 lakh to Rs 50 lakh, Rs 2.5 million (Rs 2.5 mn) to Rs 5 million (Rs 5 mn), and revising housing and social infrastructure limits. It also advised higher bank lending limits to non-bank finance companies for on-lending.

SBI Research recommended widening PSL to include infrastructure lending, creating a separate category for climate sustainability finance and allowing investments in green and ESG bonds to qualify. It advised classifying loans under government sponsored schemes as lending to micro enterprises and weaker sections to better reflect development priorities. The suggested changes aimed to improve financial inclusion while supporting sustainable projects.

The report argued infrastructure financing needs stronger policy support given the long term investment required to meet 2047 goals and recommended either granting priority sector status to infrastructure loans or excluding such lending from Adjusted Net Bank Credit calculations for PSL compliance. It called for reforms to the Rural Infrastructure Development Fund to improve capital treatment and interest provisions and to rebalance incentives. The study noted banks often prefer buying Priority Sector Lending Certificates over investing in the fund.

Revising PSL norms in line with emerging sectors and expanding eligible categories would strengthen credit delivery to areas critical for the next phase of economic growth and support the Viksit Bharat agenda. Coordinated policy action would be needed to ensure access to finance for weaker sections while advancing sustainable development.