Voicing dissatisfaction over credit delivery by state-owned banks, the finance ministry On Monday asked them to beef up lending to small and medium enterprises, automobile, and housing. However, bankers fear worsening of asset quality if they have to concede to the government’s wishes.

Finance Secretary Arun Ramanathan On Monday had a meeting with top officials from state-owned banks, including the State Bank of India, to review credit offtake during December 5-19.

While credit demand has slackened to some extent, banks are also exercising greater caution now than a few months earlier in giving loans to SMEs, auto, textile and other stressed sectors.

“If we have to listen to the government, then we have to stop worrying about NPAs (non-performing assets),” a banker said. According to RBI data, credit grew by 12 per cent since April compared with 10 per cent a year ago. In the fortnight to December 19, credit grew merely by 0.1 per cent.

Home loans
The much-hyped special home loan package announced by public sector banks in December has failed to take off due to high property prices and lack of confidence among people about their future cash flows, a banker who attended the meeting said.

“We have expressed our view to the government that the home loan package, which was announced, is yet to take off, primarily due to high property prices,” he said. After the credit crisis broke out in the country in October, the finance ministry has decided to take stock of the situation every fortnight.

All the state-run banks have announced special home loan packages which offer 8.5 per cent for loans below Rs 5,00,000 and 9.25 per cent for loan below Rs 20 lakh.

The interest charged will be fixed for the next five years.

The scheme, which was announced on December 15, is valid till June 30.

“As some of the sectors like information technology and automobile are laying off, customers are not sure about his or her job,” a senior bank official said.

However, Union Bank of India said it has sanctioned loans worth Rs 153 crore till December 25 under this scheme.

New Ipad Application :Business Standard's all new IPad App Click here to download for free Other Stories      - Markets end higher led by rate sensitives - New rules to seize property of corrupt babus - BSES gets Rs 5,000-cr IDBI Bank loan to pay dues - Reliance MediaWorks Q3 net loss at Rs 151 cr - Investor wealth grows by Rs 10 lakh cr in 2012 rally

Read Business news in  Advertisements -  Now property search gets more exciting than ever before! -  IndianOil Citibank Card at Zero annual card fee -  High Growth Business Opportunities in Africa - Register to explore -  Save over Rs.3000 with IndianOil Citibank Card -  Office 365 for professionals and small businesses. -  We live for our family. have you secured them? -  Financial Learning now made easier and more convenient. -  India's No. 1 Property Site. Click here to know more.. -  Win a Business Class Ticket to Europe..Know more.. -  Exim Bank Conclave on India - Africa Project Partnership. Know more.. -  Enjoy the journey as much as the destination. click to know more.. -  Be part of it The World's Largest Aircraft. -  Creating Wealth made simple the SIP way. Know more.. -  Only Developer to give a guarantee on time space & rate. -  Buy Your Property with Our Triple Guarantee in India. -  Improve Patient Care & Experience. Click here to know more -   Introduce a New Automotive Luxury Car.. know more -  Health is Wealth..... Insurance + Savings... Know More...