Growth push: Lend without fear, I’m with you, PM Modi tells bankers

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November 19, 2021 1:15 AM

PSBs have recovered as much as Rs 5 lakh crore in the last few years, Modi said, adding that such news doesn’t make as many headlines as the fleeing of a few defaulters from the country.

PM Narendra ModiPM Modi said the bad loan ratio of public sector banks has dropped to the lowest level in five years and they are flush with liquidity. (Photo: ANI)

Prime Minister Narendra Modi on Thursday called on bankers to step up lending without fear and satiate the credit appetite of a fast-recuperating economy and help spur growth.

Modi offered to stand as a “wall” to defend those bankers who may commit honest business errors, amid fears that bankers are turning risk-averse. “I am with you, near you and for you,” he said. He was addressing bankers at a conference on ‘Creating synergies for seamless credit flow and economic growth’ here.

The assurance comes days after former State Bank of India chairman Pratip Chaudhuri was arrested in an alleged loan scam case, drawing sharp protests from the banking community. Chaudhuri has now been granted bail.

The economy is recovering from pandemic-induced shocks and is expected to grow in the range of 8.7% to 10.5% in the current fiscal. A massive credit push is thus required for businesses to continue with their operations without hiccups and expand.

Having remained muted for months together, non-food loan flow has witnessed an uptick of late. Growth in non-food bank credit improved to 6.8% in September from 5.1% a year earlier. Loans to industry, however, grew only 2.5%. That is despite the fact the weekly average (net) liquidity surplus in the banking system jumped from an average of Rs 4.5 lakh crore at the end of June to over Rs 7.5 lakh crore as of September-end, according to CARE Ratings.

Modi said the bad loan ratio of public sector banks (PSBs) has dropped to the lowest level in five years and they are flush with liquidity. The consolidation exercise in recent years has brought in greater efficiency and helped PSBs raise money. They are in a strong position now to support the country’s growth requirements, as “we found ways to address the problems and challenges from before 2014 one by one”, he said.

“This is a time for you to support wealth creators and job creators. It is the need of the hour that the banks work proactively to bolster the wealth sheet of the country along with their own balance sheets,” the Prime Minister said.

He asked bankers to go beyond the traditional banking models to make credit available to critical segments of the economy, which include both established businesses and start-ups, and individuals. “I am aware that it’s important to invest in viable projects. At the same time, we (bankers) can play a proactive role in making the projects viable,” he said.

Instead of waiting for the customers to come and seek loans, the bankers can analyse the credit appetite of both existing and potential customers and approach them with customised solutions, the Prime Minister said.

PSBs have recovered as much as Rs 5 lakh crore in the last few years, Modi said, adding that such news doesn’t make as many headlines as the fleeing of a few defaulters from the country.

While appreciating a proposal to set up a web-based project funding tracker to bring together ministries and banks, Modi suggested that it be added to the GatiShakti Portal as an interface.

Modi also called on banks to help unlock the productive potential of citizens. He cited the example of a recent research report by the banking sector, which suggests that states where more Jan Dhan accounts are opened have witnessed a reduction in crime rate.

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