The most obvious is that since it is a market based mechanism that leverages on comparative advantage, it could be efficiency enhancing. Second, it could lower interest rates for final borrowers provided the efficiency gains on account of PSLCs are passed on to them.
However, on the flip side it is argued that there may likely be reduction in aggregate PSL from the banking system and of its contribution to the RIDF to the extent PSLCs are acquired from non-bank institutions such as MFIs, NBFCs which currently have no PSL obligation. 23.