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FM Arun Jaitley to meet PSB heads today; NPAs, rate cut likely on agenda

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New Delhi | Updated: November 23, 2015 9:29:58 AM

Arun Jaitley will review state-owned banks’ performance in bad loan reduction, priority sector lending and in the financial inclusion schemes in pension and insurance sectors at a meeting of PSU bank chiefs here on Monday.

Arun Jaitley psbs meetArun Jaitley is expected to review the interest rate cut by banks following reduction in the key policy rate by RBI in September. (PTI)

Finance minister Arun Jaitley will review state-owned banks’ performance in bad loan reduction, priority sector lending and in the financial inclusion schemes in pension and insurance sectors at a meeting of PSU bank chiefs here on Monday.

An official statement from the finance ministry said that lending to micro, small and medium enterprises (MSMEs) and the status of funding commitments made by banks for renewable energy projects for the next five years would also be discussed at the meeting, which would be attended by the top brass in the ministry as well as by representatives of the RBI and other departments.

The performance review meeting of public sector banks (PSBs) will also take stock of the credit flow to productive sectors to spur economy and review of Indradhanush, the seven-pronged strategy to revive PSBs, sources said.
The government in August announced the programme, which includes Rs 70,000 crore capital infusion in PSBs in four years, starting with Rs 25,000 crore this fiscal, and measures to de-stress banks by introducing governance reforms. The gross NPAs of PSBs rose to 6.03% at the end of June 2015, as against 5.20% in March 2015.

According to the sources, the meeting is expected to review credit offtake by sectors such as home, education and corporates as well as the progress made under the Jan Dhan Yojana and Prime Minister’s social security schemes, among other issues. The meeting will also examine what steps have been taken by state-owned banks in the aftermath of R6,100-crore Bank of Baroda black money remittance case to avoid such episodes in future.

Arun Jaitley is expected to review the interest rate cut by banks following reduction in the key policy rate by RBI in September.

RBI in its September bi-monthly monetary policy review had cut interest rate by a higher-than-expected 0.5%. The benchmark repurchase (repo) rate has subsequently come down from 7.25% to 6.75%, the lowest in four-and-a-half years.

The progress of three social security schemes, namely Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri Suraksha Bima Yojana (PMSBY) and Atal Pension Yojana (APY), and the Micro Units Development & Refinance Agency (MUDRA), among others, is also likely to feature in the discussions.

According to an official statement, the major thrust areas of review would be priority sector lending, second quarter results, financial literacy, PMMY and insurance and pension schemes.

Apart from these, ministry of MSME will discuss issues related to MSME financing, while ministry of new and renewable energy (MNRE) will discuss status of commitment given by banks for funding renewable energy projects in the next five years, it said.

During the review meeting, ministry of food processing would discuss utilization of special fund of R2,000 crore set-up by the ministry of finance to provide affordable credit to designated Food Parks (including Mega Food parks) and food processing units.

(With PTI inputs)

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