iSPIRT Introduces Priority Sector Lenders Association of India (PSLAI) to Enhance MSME Financing.
Banking & Finance
In January 2025, the Indian Software Product Industry Round Table (iSPIRT), a think tank dedicated to India's software industry, launched the Priority Sector Lenders Association of India (PSLAI), which was established under Section 8 of the Companies Act 1972.
- PSLAI will be led by Priyashmita Guha as the Chief Executive Officer (CEO) and will be supported by a skilled Board of Directors (BOD).
- The association's objective is to streamline and improve the accessibility of loans under Priority Sector Lending (PSL) norms, which are vital for banks and Non-Banking Financial Companies (NBFCs) in India.
- PSLAI is a non-profit organization aimed at promoting loans for sectors defined by the Reserve Bank of India’s Priority Sector Lending (PSL) guidelines. Its founding members include lending institutions such as UGRO Capital, IIFL, and fintech companies like GetVantage and GetGrowth Capital. PSLAI's primary goal is to support sectors like agriculture, MSMEs, and affordable housing by ensuring they receive essential financial backing for growth.
Main Point :- (i) According to RBI guidelines, banks are required to allocate a minimum of 40% of their Adjusted Net Bank Credit (ANBC) to Priority Sector Lending (PSL), resulting in an annual disbursement of Rs 64 trillion to sectors like agriculture, MSMEs, and affordable housing.
(ii) The MSME sector, contributing 29% to India's GDP and 45.73% of exports, is currently facing a credit gap of approximately Rs 103 trillion for the Financial Year 2024 (FY24).
(iii) Despite a credit demand of Rs.138 trillion, only 25% of MSMEs' formal financing needs are met, with the majority relying on informal credit sources. To address this, PSLAI was established to improve credit access for MSMEs using technology.
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