RBI has opened a pipeline of funds for startups, home buyers and green power producers too

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  • The Reserve Bank of India has announced that it has brought in startups and renewable energy into the purview of Priority Sector Lending.
  • For loans with gold ornaments as pledges, the permissible loan to value ratio (LTV) has been increased to 90%, from the earlier 75%.
The Reserve Bank of India has announced that it has brought in startups under the purview of Priority Sector Lending.

RBI governor Shaktikanta Das today in his Monetary Policy speech said, “With a view to aligning the guidelines with emerging national priorities and bring sharper focus on inclusive development, the Priority Sector Lending (PSL) guidelines have been reviewed.”

Categories that have been under PSL are agriculture, MSMEs, education, housing, social infrastructure among others. This move will now benefit startups, who can borrow from banks with much more ease and open up another avenue for funds. The steps taken by the RBI will help the under stress companies, who have been hit by the coronavirus pandemic.

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Meanwhile, for renewable energy sectors including solar power and compressed bio-gas plants, which already fell under the PSL category, the cap has been increased for borrowing.

The RBI has also amended the priority sector guidelines to do away with regional disparity. Das said that while higher weightage will be assigned for incremental priority sector credit in the identified districts having lower credit flow, a lower weightage would be assigned in identified districts where the credit flow is comparatively higher.

But that’s not alone, the RBI governor also gave a liquidity boost to borrowers as he said that with respect to the loans sanctioned against pledges of gold ornaments, the permissible loan to value ratio (LTV) has been increased to 90%, from the earlier 75%. This means you can now borrow a larger amount against your gold jewellery.

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