CII suggests PSL reforms, seeks more Development Finance Institutions in

As part of its budget demands, the Confederation of Indian Industry (CII) has proposed reforms in India's Priority Sector Lending (PSL) framework and has asked for more Development Finance Institutions (DFI), the industry body stated on Sunday.

- TBG NETWORK

The Priority Sector Lending (PSL) is a vital policy tool in India, aimed at ensuring that key sectors crucial to the nation's development receive adequate financial support.

Mandated by the Reserve Bank of India (RBI), PSL obligates banks to allocate a specified proportion of their loans to sectors such as agriculture, education, housing, and small industries.

The framework ensures equitable credit distribution, contributing to the socio-economic growth of underserved areas.

Despite its massive success, the PSL framework requires regular recalibration to remain relevant.

This recalibration is essential to ensure that the financial resources are optimally distributed, in harmony with our vision of Viksit Bharat 2047, CII said in its release.

For instance, while agriculture contributes 14 percent of the GDP today, its PSL allocation remains at 18 per cent, unchanged from when its GDP share exceeded 30 percent.