In January 2025, the Indian Software Product Industry Round Table (iSPIRT), a think tank for India’s software industry, launched the Priority Sector Lenders Association of India (PSLAI) which was formed under Section 8 of the Companies Act 1972.
- PSLAI will be headed by Priyashmita Guha as the Chief Executive Officer(CEO) and run with the help of an accomplished Board of Directors(BoD).
- PSLAI aims to streamline and enhance the availability of loans under Priority Sector Lending (PSL) norms, a critical financial sector for banks and Non-Banking Financial Companies (NBFCs) in India.
About PSLAI:
i.PSLAI is a non-profit organization focused on promoting loans for sectors outlined by the Reserve Bank of India’s (RBI) PSL guidelines.
ii.The founding members include lending institutions like UGRO Capital Limited, India Infoline Finance Limited (IIFL), and fintech companies like GetVantage Private Limited and GetGrowth Capital Private Limited.
iii.PSLAI’s goal is to help sectors such as agriculture, small businesses (MSMEs), and affordable housing receive the necessary financial support they need to grow.
Key Points:
i.As per RBI guidelines, banks must allocate at least 40% of their Adjusted Net Bank Credit (ANBC) to PSL loans, which leads to an annual disbursement of Rs 64 trillion towards sectors like agriculture, Micro, Small, and Medium Enterprises (MSMEs), and affordable housing.
ii.Currently, the MSME sector which contributes 29% of India’s Gross Domestic Product (GDP) and 45.73% of exports faces a credit gap of about Rs 103 trillion in the Financial Year 2024 (FY24).
iii.Despite a demand for credit of Rs.138 trillion, only 25% of the formal financing needs of MSMEs are met, with the majority relying on informal credit sources.
- To address this issue, the PSLAI was established to improve credit access for MSMEs by leveraging technology.
Objectives of PSLAI:
i.Credit Disbursements: PSLAI aims to double the Rs 64 trillion currently disbursed annually under PSL and reach Rs 130 trillion in the next 3-5 years.
ii.MSME Growth: MSMEs will benefit from innovative lending solutions using Digital Public Infrastructure (DPI), such as Open Credit Enablement Network (OCEN), which assesses borrowers’ creditworthiness based on cash flow data.
iii.New Lender Categories: PSLAI plans to establish a new category of NBFC-PSLÂ focusing on PSL loans, similar to existing categories like NBFC-Micro Finance Institutions (NBFC-MFIs) & NBFC-Housing Finance Companies (NBFC-HFCs).
About Priority Sector Lenders Association of India (PSLAI):
Chief Executive Officer (CEO)- Priyashmita Guha
Headquarters- Mumbai, Maharashtra
Established- 2025
