'Stressed sectors to get govt push'
"If the economy improves and growth improves, the sectors (which are not doing well) will recover. But in the meanwhile we will have to do some handholding and try to help these sectors recover", he said while addressing a press conference after meeting the heads of public sector banks here.
The government will have to look at rising Non-Performing Assets (NPAs) sector wise and find ways and means to help them, he said, adding the "NPA is reflection of the slowdown in the economy".
The NPAs of the public sector banking group has increased by 0.98 per cent in the one-year period ending September 2012 mainly on account of the stress being faced in sectors like infrastructure, steel, construction, textile, food process and telecom infrastructure, the Minister said.
On the positive side, Chidambaram said housing and automobile sectors have been doing well on back of decline in EMIs.
The Minister said government would soon finalise capital infusion for the PSU banks and the beneficiaries would include Indian Overseas Bank, Central Bank of India and Bank of Maharashtra. The government had proposed to inject Rs 15,000 crore of capital in the PSU banks.
Referring to the issue of new banking licences, Chidambaram said he had written to the Reserve Bank to initiate the process of issuing guidelines and start accepting the licences pending approval of the Banking Regulation Amendment Act by Parliament.
Stating that slowdown is a temporary phenomenon, the Minister said the "situation is not alarming" and would improve with recovery and bad loans would become standard accounts.
"A bit of handholding (is needed) to help the sectors or the industry or the unit to tide through this difficult period...and when the economy recovers, these accounts will indeed become standard accounts", he added.
India's economic growth rate has slipped to nine-year low of 6.5 per cent in 2011-12 and the Reserve Bank of India (RBI) expects it to decline further to 5.8 per cent in the current fiscal. The first quarter of 2012-13 recorded a growth rate of 5.5 per cent, while the figures for the second quarter will be released later in the month.
The latest Index of Industrial Production (IIP) data showed 0.4 per cent contraction in factory output in September on account of dismal performance of manufacturing and capital goods sectors. The industrial output again entered the negative zone after showing a 2.3 per cent growth in the previous month.
Referring to the issues concerning farming sector, Chidambaram said all Kisan Credit Cards (KCCs) would be converted into ATM cards and that agriculture sector credit disbursal target of Rs 5.75 lakh crore, up from Rs 4.75 lakh crore in the last fiscal, would be met.
A new draft of the credit guarantee scheme would be placed before the cabinet in the next seven to ten days, the Minister added.
On the issue of NPAs in the banking sector, Chidambaram said RBI guidelines permit restructuring of loans.
"Just because an account has become an NPA, does not mean that it cannot be restructured. In fact it (RBI guidelines) allows for restructuring of an account. I think all the chairpersons are sensitive to this matter and am sure we will see through this difficult period (till) the economy recovers and the accounts become standard accounts", he added.
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