Public sector lenders, government and RBI officials on Friday began discussions on the changes required in the priority sector lending norms, among other things, as the two-day Gyan Sangam banking retreat kicked off here.
On the first day of the retreat, they deliberated on key issues like rising NPAs, low credit offtake and M&As.
Speaking to reporters, Hasmukh Adhia, secretary at department of financial services (DFS) said priority sector norms set in 1972 at 40% were yet to be reviewed. “There is surely a need for making some changes in priority sector lending norms, which the regulator has given with the consent of the government.”
Adhia added that all stakeholders of the banking industry would discuss how to review industries that now classified as PSL. “We would like to generate ideas as to what would the PSL prescription of banks be in lieu of the present state of the economy.”
He said sectors like food processing could be very important now, but might not have been when the norms were issued. Indian banks are mandated to have 40% of their total lending to the priority sector that includes agriculture, housing and education.
Bankers, Adhia added, would attend a session on understanding the best practices of private sector peers. “If a private sector bank has done anything good, we would like to learn from that.”
He said: “There is a wide disparity in the performance of public sector and private sector banks. There are many parameters on which the comparison is striking.”
He said the objective of the retreat was to learn from each other and from private sector banks as well. “There are four presentations on best practices in the banking industry that we have selected out of 40-50 of such innovations we received from various banks.”
Adhia said some best practices of Axis Bank, IDBI Bank, State Bank of India (SBI) and Andhra Bank would be shared during the sessions. While Axis Bank’s mobile youth retail banking product would be discussed, SBI’s specialist cadre of IT talent in the bank would also be shared.
“This is one of the problem areas of some PSBs and they would like to learn from each other.”