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The Government in association with the Reserve Bank of India (RBI) is considering a proposal to bring loan for Electric Vehicles (EV) infrastructure under priority sector lending by banks, a senior Finance Ministry official indicated on Saturday. He also said that a there is also a proposal to raise the retirement age for Chairman, Managing Director-cum-Chief Executive Officer and Executive Directors of Public Sector Banks.
“Financial Services Department has received a communication from Power Ministry regarding inclusion of EV infrastructure under priority sector lending. We will see what can be done,” the official said while adding that for this, the RBI would have to restructure entire priority sector lending mechanism.
RBI norms stipulate every bank to provide 40 per cent of Adjusted Net Bank Credit or Credit Equivalent Amount, whichever is higher for priority sector. Under this mechanism, eight sectors have been included with agriculture on top. Earlier, a report by NITI, RMI and RMI India, submitted in January 2022, highlighted the need for higher liquidity and lower cost of capital for EV assets and infrastructure. It said that cumulative investment in India’s electric vehicle (EV) transition could be as large as ₹19.7-lakh crore between 2020 and 2030.
Retirement age
The official also informed that there is a proposal to raise the retirement age for Chairman, Managing Director-cum-CEO and Executive Directors which is currently 62 years and 60 years, respectively. For SBI Chairman, the retirement age is 63 years. “We have not decided what will be duration of increase,” he said but indicated that it could be up to two years. This development is taking place when there is talk about giving extension to SBI Chief Dinesh Kumar Khara.
Capital for PSU General Insurance Company
Meanwhile, the official made it clear that there is no plan to recapitalise general insurance companies of public sector. “We do not think need for that as on now. In fact one of the general insurance companies may give dividend,” he said. General insurance companies include the New India Assurance Company, United India Insurance Company, the Oriental Insurance and the National Insurance Company Limited. Of these, New India is in better position .
Earlier this year, ICRA estimated the capital requirement of three PSUs (excluding New India) to be sizeable at ₹ 17,200-17,500 crore to meet the solvency of 1.50x as of March 2024, assuming the inclusion of 100 per cenr FVCA (fair value change account) in the available solvency margin. Excluding this, the capital requirement would be higher at ₹31,500-31,700 crore.
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