Banks will now be able to buy and sell four kinds of Priority Sector Lending Certificates (PSLCs) relating to Agriculture, Small & Marginal Farmers, Micro Enterprises and General via an RBI platform, which was launched on Thursday.
The platform will enable trading in the certificates through its Core Banking Solution (CBS) portal (e-Kuber). All Scheduled Commercial Banks (including Regional Rural Banks), Urban Co-operative Banks, Small Finance Banks (when they become operational), and Local Area Banks are eligible to participate in the trading.
The certificates will have a standard lot size of ₹25 lakh and multiples thereof. There will be no transfer of credit risk on the underlying and the settlement of funds will be done through the e-Kuber portal.
The revised priority sector guidelines (April 2015) have provided for the introduction of PSLCs as a mechanism to incentivise banks having surplus for lending to different categories of the priority sector.
Objectives On lines of carbon credit trading, the goal of PSLCs is to allow market mechanism to drive priority sector lending by leveraging the comparative strength of different banks.
For instance, a bank with an expertise in lending to small farmers can over perform there and get benefit by selling its over performance through PSLCs. Another bank that is better at lending to small industry can buy these certificates, while selling PSLCs for micro-enterprise loans.