RBI to decide on priority sector loans for EVs
- ByStartupStory | December 6, 2021
The NITI Aayog chief, Amitabh Kant have confirmed that the government’s policy think tank have forwarded a proposal to the RBI to categorize loans to purchase under the priority sector lending (PSL) segment.If accepted, it will help the segment to get credit at a lower interest rate.Currently, these loans are given under the auto retail category, but lenders are wary about financing purchase of electric vehicles (EVs) as they are unsure about the risks in a segment which is still in a beginning stage.
Amitabh Kant in an interview with the Economic Times said, “The inclusion of EVs under PSL would not only reduce cost of finance but also provide finance to more people, thus increasing penetration of EVs in India. Our view is that there is a case for this in the context of the impending climate change crisis and India’s recent commitments at COP26 in Glasgow.”
To improve financing for EVs, Niti Aayog is also working with the World Bank to set up a $300-million ‘first loss risk sharing instrument.’ State Bank of India is the programme manager for this facility, under which total financing is expected to be around $1.5 billion.
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