Niti Aayog proposes to include EVs in RBI's priority-sector lending guidelines
- NITI Aayog has proposed the government to include electric vehicles in the Reserve Bank of India’s priority-sector lending guidelines
- It has suggested in the report that electric two-wheelers, three-wheelers, and commercial four-wheelers are early segments to prioritise under PSL
- According to it, this move will give a significant push to retail lending for EVs.
- The report gives suggestions regarding Electric vehicles
- It is being released by the NITI Aayog with Rocky Mountain Institute (RMI) and RMI India
Suggestions of report
- Banks and non-banking financial companies (NBFCs) in India have the potential to achieve an electric vehicle (EV) financing market size of Rs 40,000 crore by 2025 and Rs 3.7 lakh crore by 2030.
- Financial institutions have an important role to play in accelerating the adoption of EVs in India and supporting the decarbonisation of road transport
- The RBI may consider various EV segments and use cases based on five parameters: socio-economic potential, livelihood generation potential, scalability, techno-economic viability, and stakeholder acceptability.
- The Aayog has suggested in the report that electric two-wheelers, three-wheelers, and commercial four-wheelers are early segments to prioritise under PSL.
- It aims to expand financial access and support employment opportunities in India.
- Priority Sector means those sectors which the Government of India and Reserve Bank of India consider as important for the development of the basic needs of the country and are to be given priority over other sectors.
- The banks are mandated to encourage the growth of such sectors with adequate and timely credit.
Categories of Priority Sector
- Agriculture, Micro, Small and Medium Enterprises, Export Credit, Education, Housing ,Social Infrastructure, Renewable Energy, Start up sector and others
RBI guidelines for PSL for scheduled commercial banks:
- 40% of the total net bank credit should go to a priority sector advances.
- 10% of the priority sector advances or 10% of the total net bank credit, whichever is higher should go to the weaker section.
- 18% of the total net bank credit should go to agricultural advances.
- Within the 18 percent target for agriculture, a target of 8 percent of Adjusted Net Bank Credit (ANBC) or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher is prescribed for Small and Marginal Farmers, to be achieved in a phased manner.
- 5 of ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher should go to Micro enterprises.
Government Schemes and Initiatives for Promotion of Electric Vehicles
- National Electric Mobility Mission Plan (NEMMP) 2020: It was unveiled in India in 2013 to make a major shift to electric vehicles and to address the issues of national energy security, vehicular pollution, and growth of domestic manufacturing capabilities.
- The scheme was to offer subsidies and create supporting infrastructure for e-vehicles.
- FAME-II: the Union Cabinet cleared a Rs 10,000-crore programme under this scheme in February 2019
- The main objective of the scheme is to encourage faster adoption of electric and hybrid vehicles by offering upfront incentives on the purchase of electric vehicles and also by establishing necessary charging infrastructure for EVs.
- A production-linked incentive (PLI) scheme for Advanced Chemistry Cell (ACC) ( Rs 18,100 crore) for the supplier side and Auto and Automotive Components (Rs 25,938 crore) for manufacturers of electric vehicles has also been launched