The government is said to have received representations regarding the inclusion of electric vehicles under the priority sector lending (PSL) category.
The official noted that the government received a representation to include EVs in the priority sector, and they are looking at reworking the priority sector lending requirements for banks.
The matter will now be discussed with the Reserve Bank of India, the same official said.
PSL mandates banks to direct a specified percentage of bank credit to priority sectors, offering opportunities for certain emerging sectors to mobilise capital easily at lower interest rates.
Currently, bankers are mandated to direct 40% of adjusted net bank credit to priority sectors.
A Niti Aayog Report released in January 2022 also made the case for including EVs in the PSL guidelines, stating that electric two- and three-wheelers, as well as four-wheelers in commercial use cases, represent favourable segments for inclusion.
It was argued that these have a greater need for formal credit, higher potential for job creation and scale in urban and rural areas, relatively high sales forecasts, greater model availability, and a smaller gap to parity in total cost of ownership.
Currently, the RBI norms for priority lending include agriculture, micro, small, and medium enterprises (MSME), export credit, education, housing, social infrastructure, and renewable energy.
The current norms for renewable energy priority lending as per the RBI master directions include a limit of up to Rs 30 crore for solar-based power generators, biomass-based power generators, wind mills, micro-hydel plants, and also for non-conventional energy-based public utilities. For individual households, the loan limit was set at Rs 10 lakh per borrower, as per the latest guidelines in July 2023.
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