Government considers boosting EV sector via priority lending

29 Aug 2023 CW Team

Current RBI guidelines require banks to allocate 40% of their adjusted net bank credit to the priority sector. Presently, PSL encompasses seven sectors, including agriculture, micro, small and medium enterprises, export credit, education, housing, social infrastructure, and renewable energy.

The government's aim is to increase the prevalence of EVs on Indian roads as part of its efforts to achieve net-zero emissions. Subsidies are provided to manufacturers through the Faster Adoption and Manufacturing of Hybrid & Electric Vehicles (FAME) program. The potential inclusion of EV infrastructure in PSL is anticipated to facilitate increased credit flow to the sector by mandating financial institutions' involvement.

A January 2022 report by Niti Aayog highlighted the suitability of electric two- and three-wheelers, as well as commercial four-wheelers, for inclusion in priority sector lending.

Notably, EV sales surpassed 700,000 in the first half of 2023, demonstrating the sector's rapid growth.

Previously, reports suggested that banks were advocating for the inclusion of electric vehicle infrastructure and green hydrogen projects within priority sector lending.

The report also emphasised the significance of substantial investment, estimating cumulative investments of up to $266 billion between 2020 and 2030 for India's electric vehicle transition. This underscores the necessity for increased liquidity and reduced capital costs for EV assets and infrastructure.

Additionally, it was indicated that non-life insurance companies were unlikely to receive capital infusion in the current year, as their financial positions are relatively stable.

The government is also taking steps to expand micro-insurance coverage, encouraging banks to extend accident and life insurance schemes to Pradhan Mantri Jan Dhan Yojana (PMJDY) account holders. The goal is to provide comprehensive micro-insurance to a larger portion of the population, with the potential involvement of Anganwadi workers in promoting such initiatives.

Furthermore, the government is exploring opportunities to collaborate with the labour ministry and leverage the E-Shram portal to enhance coverage for schemes like Pradhan Mantri Jeevan Jyoti Bima Yojana and Pradhan Mantri Suraksha Bima Yojana.

This initiative aligns with the recent announcement that the number of PMJDY accounts has reached 500 million, with the average balance in these accounts increasing significantly over the past nine years.

The government is considering a significant move to boost the electric vehicle (EV) sector by potentially including EV infrastructure in the priority sector lending (PSL) category. A senior official revealed this development, highlighting the potential for substantial support to the EV industry.Current RBI guidelines require banks to allocate 40% of their adjusted net bank credit to the priority sector. Presently, PSL encompasses seven sectors, including agriculture, micro, small and medium enterprises, export credit, education, housing, social infrastructure, and renewable energy.The government's aim is to increase the prevalence of EVs on Indian roads as part of its efforts to achieve net-zero emissions. Subsidies are provided to manufacturers through the Faster Adoption and Manufacturing of Hybrid & Electric Vehicles (FAME) program. The potential inclusion of EV infrastructure in PSL is anticipated to facilitate increased credit flow to the sector by mandating financial institutions' involvement.A January 2022 report by Niti Aayog highlighted the suitability of electric two- and three-wheelers, as well as commercial four-wheelers, for inclusion in priority sector lending.Notably, EV sales surpassed 700,000 in the first half of 2023, demonstrating the sector's rapid growth.Previously, reports suggested that banks were advocating for the inclusion of electric vehicle infrastructure and green hydrogen projects within priority sector lending.The report also emphasised the significance of substantial investment, estimating cumulative investments of up to $266 billion between 2020 and 2030 for India's electric vehicle transition. This underscores the necessity for increased liquidity and reduced capital costs for EV assets and infrastructure.Additionally, it was indicated that non-life insurance companies were unlikely to receive capital infusion in the current year, as their financial positions are relatively stable.The government is also taking steps to expand micro-insurance coverage, encouraging banks to extend accident and life insurance schemes to Pradhan Mantri Jan Dhan Yojana (PMJDY) account holders. The goal is to provide comprehensive micro-insurance to a larger portion of the population, with the potential involvement of Anganwadi workers in promoting such initiatives.Furthermore, the government is exploring opportunities to collaborate with the labour ministry and leverage the E-Shram portal to enhance coverage for schemes like Pradhan Mantri Jeevan Jyoti Bima Yojana and Pradhan Mantri Suraksha Bima Yojana.This initiative aligns with the recent announcement that the number of PMJDY accounts has reached 500 million, with the average balance in these accounts increasing significantly over the past nine years.

Infrastructure Urban

31 Jul 2026

SCLR Extension Nears Completion Linking BKC With Signal-Free Route

The Santacruz-Chembur Link Road (SCLR) extension towards Bandra-Kurla Complex (BKC) via the Mumbai University campus has entered its final stage, bringing motorists closer to a direct, signal-free connection between the Western Express Highway and the city’s commercial district. The elevated connector is being built as an arm from the SCLR alignment and will link the western suburbs with BKC without surface signals. The link is designed to reduce journey times for commuters travelling from the western suburbs to BKC and to improve access to eastern Mumbai. By carrying through traffic above s..

Infrastructure Transport

31 Jul 2026

Raiganj MP Seeks Bengal Only Highway Link To Siliguri

Raiganj Member of Parliament Kartik Chandra Paul met Union Minister for Road Transport and Highways Nitin Gadkari in New Delhi to press for a new stretch of national highway in North Dinajpur district. He urged approval for a Bengal-to-Bengal link that would connect National Highways 12 and 27 to allow vehicles bound for Siliguri to avoid the current route through Kishanganj in neighbouring Bihar. He also submitted a proposed alignment of the new road to the ministry for consideration. At present vehicles from Raiganj travel along NH-12 and join NH-27 at Purnia More in Dalkhola, a route that p..

Infrastructure Transport

31 Jul 2026

Airport Kilambakkam Metro Line To Be Extended To Chengalpattu

Chennai Metro Rail (CMRL) has invited tenders for two detailed project reports that would extend its rail network to Chengalpattu in the south and extend Corridor-5 to Wimco Nagar in the north as part of a second wave of expansion beyond the operator's corridors under construction. The move signals an acceleration of planning for suburban links and interchange nodes. The larger of the two studies covers a roughly 27km extension from the planned Kilambakkam metro station to Chengalpattu under Corridor-1, Phase I. CMRL floated the tender at an estimated cost of Rs 21.6 mn. The proposed line woul..