FM to meet bankers on June 10

With credit growth rate dropping to 15.8 per cent, Finance Minister Pranab Mukherjee will review the interest rate situation and discuss the targets and strategies to boost growth in advances during a meeting with public sector bank chiefs on Wednesday.

In addition, according to the agenda for the meeting circulated by the finance ministry, Mukherjee will also take up the capital adequacy projections of banks over the medium term.

The discussion on the capital adequacy ratio is aimed at gauging whether these lenders have sufficient capital to meet the higher need for bank resources. The move comes in the backdrop of a Rs 20,000-crore recapitalisation package, of which over Rs 3,800 crore has already been provided.

Sources in the banking industry said the government was trying to assess how public sector banks viewed the overall market situation and their lending strategies given that fund flow from private and foreign banks had slowed down.

In line with the new government’s thrust, Mukherjee will accord top priority to infrastructure lending and financial inclusion during the interaction.

Within financial inclusion, Mukherjee’s second interaction with bankers since he took charge at North Block earlier this year, the government wants to know the details of the branch network and the unbanked blocks in the country.

In addition, the government has asked banks to submit the details of the financial inclusion initiatives undertaken by way of opening no-frills accounts, which come with zero balance facility.

Also, details on business correspondents or business facilitators and the self-help group programmes have been sought by the finance ministry.

Sources said the government was trying to ensure that over the next five years most parts of the country should be connected to the banking channels either through branches or by way of presence of business correspondents.

Among the sectors flagged separately for discussion is infrastructure since the government is trying to boost activity in this segment of the economy and companies are complaining of inadequate flow of resources.