Mumbai: SBI Research Suggest Raising PSL Loan Limits

The report has proposed raising the PSL eligibility limit for home loans to ₹ one crore in metro cities and ₹75 lakh in other centres, while also recommending that the education loan cap under PSL be doubled to ₹50 lakh.

It has also proposed to increase the maximum project cost limits while allowing a 25 per cent borrower margin and bringing intermediated housing loans under the PSL framework. The report has argued that the average ticket size of incremental housing loan portfolio is expected to increase to around Rs 45-50 lakh, which is the threshold limit prescribed by RBI. Growth in home loan under PSL is not in tandem with growth in overall Housing loan portfolio.

Under the existing PSL guidelines, for centres with a population of 50 lakh and above, the maximum dwelling cost is ₹63 lakh and the loan limit is ₹50 lakh. For centres with a population of 10 lakh and above but below 50 lakhs, the maximum dwelling cost is ₹57 lakh and the loan limit allowed is ₹45 lakh. For centres with population below 10 lakhs, the maximum dwelling cost is ₹44 lakh and the loan limit is ₹35 lakh.

Similarly, the cost of education too has significantly gone up over the past few years as there has been substantial increase in the fee structure of various unaided private medical/ engineering/ professional colleges/ institutes in the past few years. In addition, many Indian Students are exploring foreign education.

Considering it as a national priority, the current loan limit to individuals for educational purposes including vocational courses under PSL may be increased from ₹25 lakh to a higher level, for example ₹50 lakh said the report.

The report argued that the RBI had devised a PSL mechanism in 1972 to ensure credit flow to underserving sectors. Since then, it has been revised periodically.

“Possibly, an opportune time has now come to assess future needs of financial inclusion and priority sector lending and make policy changes needed to ensure access to finance to weaker sections in line with Viksit Bharat objective,” said the report titled Viksit Bharat demands comprehensive review of PSL guidelines released on Tuesday.

For Renewable Energy loans the report suggested increasing the limit from ₹35 crores to ₹100 crore, under social infrastructure it has asked for increasing school loans to ₹15 crore, healthcare loans to ₹25 crore.

Agri & Food Processing loans to be doubled to ₹200 crore (individual banks), ₹500 crore (system-wide) besides removing incremental caps and raising borrower limit to ₹200 crore for export credit loans.