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Time of India
08-07-2025
- Business
- Time of India
Explained: What a 'Just Transition' means for coal workers, states and financial regulators?
New Delhi: As India accelerates its climate commitments and shifts away from fossil fuels, the question of how to finance a 'Just Transition' — one that supports workers, communities and local economies — has come to the fore. According to a new report by the Institute for Energy Economics and Financial Analysis (IEEFA), India must build an inclusive Just Transition (JT) financing ecosystem that brings together ministries, regulators, financial institutions, corporates, and civil society actors. The report, titled Just Transition Financing Ecosystem: Stakeholder Consultation, was released on July 7, 2025, and recommends a phased roadmap — starting from pilot schemes and fiscal incentives in the short term to structural reforms in the long term. What is Just Transition in India's energy context? Just Transition in India refers to an equitable shift away from carbon-intensive sectors like coal, steel, cement, and automotive. It means that those most affected — such as workers in fossil fuel-based industries and vulnerable communities — are not left behind as India builds a greener economy. The IEEFA report notes that while sustainable finance in India is evolving, social priorities like worker reskilling, community resilience, and economic diversification remain underfunded. Who are the stakeholders in Just Transition financing? The report outlines a broad ecosystem of stakeholders. At the top are regulators like the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI), which can enable a shift through policies on disclosure, lending norms, and green finance tools such as Priority Sector Lending (PSL) and Sustainability Linked Loans. 'Capital can be mobilised through public and private sources, guided by ministries via blended finance and incentives. Corporates and their supply chains are key to implementation, especially in high-emission sectors,' said Gaurav Upadhyay, Energy Finance Specialist, IEEFA. Financial instruments like Green Deposits and Sovereign Green Bonds could also be modified to include JT-aligned eligibility and impact metrics. What policy support is required? Central ministries such as the Ministry of Finance (MoF), Ministry of Environment, Forest and Climate Change (MoEFCC), Ministry of Power (MoP), and Ministry of New and Renewable Energy (MNRE) are seen as key actors in setting the policy framework. 'The MoF can embed JT into India's fiscal framework by aligning green taxonomies, allocating resources, and creating a dedicated fund for affected regions and communities,' said Sangeeth Raja Selvaraju, Policy Fellow (India and ASEAN), Grantham Research Institute at LSE. The MoEFCC could help align JT with national environmental policies and leverage programmes like the Green Skill Development Programme and Green Credit Programme. The ministry is also expected to tap into international funding like the Green Climate Fund for nature-based and community resilience solutions. What's the role of SEBI and RBI? SEBI's Business Responsibility and Sustainability Reporting (BRSR) framework and its ESG-linked product regulations could play a role, the report says. 'For instance, SEBI has initiated sustainability reporting through BRSR and ESG-linked products, but JT indicators are still missing. Expanding BRSR to include social risk and JT metrics could help channel capital toward companies with credible transition plans,' said Labanya Prakash Jena, co-author and sustainable finance consultant at IEEFA. Are corporates prepared for Just Transition? According to the report, corporates are starting to integrate JT in their business planning, but many face roadblocks. These include high transition costs, limited finance access for MSMEs, and supply chain constraints. Companies are asking for clearer policy guidance, supportive regulation, and structured investor engagement. There's also a growing demand for integrating social inclusion metrics into Environmental, Social and Governance (ESG) frameworks. What about state-level readiness? A key gap is at the state level, especially in coal-dependent regions. 'The government must also look to boost state-level engagement, especially in coal-dependent regions, as many states lack the technical capacity to design, finance, or implement JT-aligned programmes,' said Jena. What are the report's recommendations? IEEFA advocates a three-phase approach to institutionalise JT financing: 1. Short term – Pilot schemes, fiscal incentives, and state-level engagement 2. Medium term – Regulatory scaling through integration of JT metrics in finance and ESG 3. Long term – Structural reforms such as dedicated JT funds, blended finance platforms, and community-level inclusion 'Ultimately, a successful JT will require sustained coordination between ministries, regulators, state governments, corporates, and civil society,' Upadhyay said. He added that investing in capacity building, financial innovation, and inclusive planning will help ensure that India's energy transition is not just green, but also equitable.
Time of India
23-06-2025
- Business
- Time of India
Ujjivan, ESAF, Equitas, and other small finance bank shares rally up to 6% as RBI eases priority sector lending norms
Shares of small finance banks (SFBs) rallied up to 6% on Monday after the Reserve Bank of India (RBI) eased priority sector lending (PSL) norms, reducing the mandatory requirement by 15 percentage points. Among the gainers, ESAF SFB surged 6% to Rs 33.16, followed by Ujjivan SFB , which rose 4% to Rs 50.20. Utkarsh SFB climbed 4%, Equitas SFB gained 4.6%, Suryoday SFB advanced 2%, Jana SFB rose 2.7%, and AU SFB edged up 1%. Also Read: 11 Nifty mid & smallcap stocks that can rally 40-90% over the next 12 months Currently, small finance banks (SFBs) are required to lend 75% of their Adjusted Net Bank Credit (ANBC) or Credit Equivalent of Off-Balance Sheet Exposures (CEOBE)—whichever is higher—to priority sectors such as agriculture, MSMEs, and education. Under the revised norms, this requirement will be reduced to 60% starting from FY26. From FY26 onward, SFBs will continue to allocate 40% of ANBC or CEOBE to specific sub-sectors under the Priority Sector Lending (PSL) framework, as per existing guidelines. The remaining 20% can be deployed across any PSL sub-sectors where the bank has a competitive edge. Live Events Also Read: Is the grey market premium misleading? Decoding the valuation gap in HDB Financial's IPO In March 2025, the RBI revised the Priority Sector Lending (PSL) guidelines to expand loan limits for categories such as housing and education, and similarly reduced the PSL target for urban cooperative banks from 75% to 60%. According to the RBI, these changes aim to provide greater operational flexibility to small finance banks while ensuring the continued flow of credit to critical sectors. The revised PSL norms will come into effect from April 1, 2025. Also Read: $2.4 trillion worth of gold! India's household hoard is 6x Pakistan's economy ( Disclaimer : Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)
Economic Times
23-06-2025
- Business
- Economic Times
Ujjivan, ESAF, Equitas, and other small finance bank shares rally up to 6% as RBI eases priority sector lending norms
Shares of small finance banks (SFBs) rallied up to 6% on Monday after the Reserve Bank of India (RBI) eased priority sector lending (PSL) norms, reducing the mandatory requirement by 15 percentage points. ADVERTISEMENT Among the gainers, ESAF SFB surged 6% to Rs 33.16, followed by Ujjivan SFB, which rose 4% to Rs 50.20. Utkarsh SFB climbed 4%, Equitas SFB gained 4.6%, Suryoday SFB advanced 2%, Jana SFB rose 2.7%, and AU SFB edged up 1%. Also Read: 11 Nifty mid & smallcap stocks that can rally 40-90% over the next 12 months Currently, small finance banks (SFBs) are required to lend 75% of their Adjusted Net Bank Credit (ANBC) or Credit Equivalent of Off-Balance Sheet Exposures (CEOBE)—whichever is higher—to priority sectors such as agriculture, MSMEs, and education. Under the revised norms, this requirement will be reduced to 60% starting from FY26. From FY26 onward, SFBs will continue to allocate 40% of ANBC or CEOBE to specific sub-sectors under the Priority Sector Lending (PSL) framework, as per existing guidelines. The remaining 20% can be deployed across any PSL sub-sectors where the bank has a competitive edge. Also Read: Is the grey market premium misleading? Decoding the valuation gap in HDB Financial's IPO In March 2025, the RBI revised the Priority Sector Lending (PSL) guidelines to expand loan limits for categories such as housing and education, and similarly reduced the PSL target for urban cooperative banks from 75% to 60%. ADVERTISEMENT According to the RBI, these changes aim to provide greater operational flexibility to small finance banks while ensuring the continued flow of credit to critical sectors. The revised PSL norms will come into effect from April 1, 2025. Also Read: $2.4 trillion worth of gold! India's household hoard is 6x Pakistan's economy (Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel)
Business Standard
10-06-2025
- Business
- Business Standard
Reserve Bank expands exemptions under Large Exposures Framework for Priority Sector Lending Shortfalls
The Reserve Bank of India (RBI) has issued notification yesterday, expanding the scope of exemptions under its Large Exposures Framework (LEF). According to the notification, RBI modifies paragraph 3.1 of the LEF to broaden the scope of entities for which exposures can be excluded from the LEF limits. Under the earlier provisions, banks were allowed to exclude from LEF calculations only those deposits maintained with the National Bank for Agriculture and Rural Development (NABARD) made on account of shortfalls in meeting Priority Sector Lending (PSL) targets. The RBI has now extended this exemption to include similar contributions made to: National Housing Bank (NHB) Small Industries Development Bank of India (SIDBI) Micro Units Development and Refinance Agency Ltd. (MUDRA Ltd.) Any other entity specified by the RBI The updated rule clarifies that these exclusions apply only when the contributions are made to offset PSL shortfalls. By revising paragraph 3.1 of the LEF, the RBI has effectively increased the range of permissible exemptions under the exposure norms, granting banks greater flexibility in managing their credit exposure portfolios.
Economic Times
09-06-2025
- Business
- Economic Times
Gold loan stocks like Muthoot Fin, Manappuram rally up to 4% as RBI eases lending norms; NBFCs eye growth revival, margin expansion
Gold loan stocks surged on Monday after the Reserve Bank of India (RBI) released its final guidelines on gold loans, revising the Loan-to-Value (LTV) ratio for small-ticket loans to 85% from 75% and simplifying procedural norms. The move, seen as a relief for non-banking financial companies (NBFCs), is expected to boost disbursements and intensify competition across the lending ecosystem. ADVERTISEMENT Shares of Muthoot Finance rose as much as 3.3% to Rs 2,527 on the BSE, Manappuram Finance gained 2.5% to Rs 253.90, and IIFL Finance jumped 4.4% to Rs 470.90 in intraday trade. The new RBI norms, effective April 2026, raise the LTV cap for gold loans below Rs 2.5 lakh to 85% and exempt these loans from mandatory credit appraisal requirements. End-use monitoring will also be limited to loans qualifying as Priority Sector Lending (PSL), with an emphasis on faster processing and reduced paperwork. 'There was nothing new in the draft norms on gold loans. We have consolidated all other norms... we will today or Monday morning release the final guidelines,' said RBI Governor Sanjay Malhotra following the policy final guidelines also formalize valuation norms, renewal conditions, audit protocols, and auction processes for gold collateral, placing NBFCs, banks, and small finance banks on a level playing field. ADVERTISEMENT According to Motilal Oswal, the final gold lending guidelines are 'milder' than the draft version and pose only a 'marginal near-term impact' on disbursement LTVs for gold loan NBFCs.'This is positive for gold loan NBFCs, particularly Muthoot Finance, which had borne the maximum brunt of the earlier draft,' the brokerage noted. While regulatory arbitrage for NBFCs will reduce, they can manage disbursement levels by tweaking loan structures and repayment schedules. ADVERTISEMENT Emkay Global echoed similar optimism, calling the new RBI policy a 'blockbuster sequel.' The brokerage highlighted that the combination of a 50 basis point repo rate cut, simplified gold loan norms, and relaxed qualifying asset criteria reflects the RBI's confidence in NBFC sector stability.'Now the ball is in NBFC lenders' court to drive risk-calibrated profitable growth,' Emkay said. ADVERTISEMENT The brokerage expects net interest margins (NIMs) for NBFCs to expand starting Q1FY26, driven by lower funding costs—especially for lenders with fixed-rate loan books like gold and vehicle regulatory easing is expected to revive loan demand in the gold loan segment, with banks and NBFCs now operating under harmonized rules. This could raise competitive intensity, particularly for NBFCs that previously benefited from more flexible LTV limits. ADVERTISEMENT Emkay observed that gold loans and loans against property (LAP) are already showing improved traction in Q1FY26, even as home and vehicle finance segments remain subdued. With the regulatory overhang lifted and interest rate tailwinds in place, gold loan lenders are now expected to focus on defending market share and improving the RBI's actions are seen as accommodative and growth-oriented, supporting a bullish medium-term outlook for gold loan players—especially as systemic risks recede and operational clarity improves. Also read | Bank, auto stocks drive Sensex over 400 pts higher, Nifty tops 25,100 (Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel)
