After the government nudged the PSU banks to increase loan disbursal, Finance Minister Nirmala Sitharaman on Thursday met private sector banks and financial institutions to discuss credit outreach programme.
After the government nudged the PSU banks to increase loan disbursal, Finance Minister Nirmala Sitharaman on Thursday met private sector banks and financial institutions to discuss credit outreach programme. The government believes that there is a demand waiting and private sector lenders will extend support in this regard, Finance Minister said. There was no issue over liquidity raised in the meeting by the bankers, NBFCs and MFIs, Nirmala Sitharaman added. There was a near unanimity that the rural India has demand, she said, adding microfinance companies are seeing robust demand in the area. “On the whole, it was a very tonic-like meeting where I heard good things, positive thing,” she added.
The economy will see an uptick in the coming festive season and the ongoing slowdown appears to have bottomed out, she noted. On slowing vehicle sales, she said that the banks see the issue as cyclical and not structural. The slowdown in sales is sentiment driven according to the banks, she added. Speaking at the press confernece, DFS Secretary Rajeev Kumar said that the NBFCs raised issues on KYC while vehicle and housing NBFCs informed about robust demand.
It comes weeks after the government announced key measures with respect to banking. The government wants to ensure maximum credit disbursal during the festive season and to fasten the flow of banks’ liquidity to the NBFCs and the customers, Nirmala Sitharaman had said. All scheduled banks were directed to disburse loans in loan melas in 400 districts in two legs for retail customers and NBFCs. The government has already provided support to PSU banks by recapitalising them by Rs 70,000 crore and additional liquidity support of Rs 30,000 crore to Housing Finance Companies (HFCs).
Meanwhile, in August this year, Finance Minister Nirmala Sitharaman announced merge of some PSU banks. She had said that Oriental Bank of Commerce and United Bank would be merged into Punjab National Bank (PNB) to create the country’s largest state-run bank after State Bank of India (SBI), with a total business of nearly Rs 18 lakh crore. Syndicate Bank similarly will be amalgamated with Canara Bank, and the broader entity will be the fourth-largest public-sector bank (PSB). Union Bank, Andhra Bank and Corporation Bank will be merged and emerge as the fifth-largest PSB. The merger of Indian Bank and Allahabad Bank will create the seventh-largest state-run bank.