FinMin considering proposals to include EVs under priority sector lending

The finance ministry is considering the proposal for including the electric vehicles infrastructure under the priority sector lending category, a senior government official said on Saturday.

The move will promote and accelerate the penetration of EVs in the country and attract investments in the sector.

“We have received a representation from power ministry to include electric vehicles infrastructure in priority sector lending. We will look at reworking the priority sector lending requirements for banks,” he added.

At present, there are eight sectors that fall under the priority sector mechanism. These include agriculture, MSMEs, export credit, housing, education, renewables, and social infrastructure sectors.

Currently, domestic commercial banks (excluding regional rural banks and small finance banks) are required to lend 40 per cent of their total loan book towards priority sectors. 

In January 2022, Niti Aayog wrote a report detailing the inclusion of EVs in priority sector lending guidelines. The report titled ‘Banking on Electric Vehicles in India’ provides considerations and recommendations to inform the inclusion of EVs in the RBI’s priority-sector lending (PSL) guidelines.

“Cumulative investment in India’s electric vehicle transition could be as large as  Rs 19.7 trillion between 2020 and 2030, highlighting the need for higher liquidity and lower cost of capital for EV assets and infrastructure,” the report noted.