Finance secy Rajiv Kumar to hold review meeting with public sector banks

Finance Secretary Rajiv Kumar will hold a review meeting with public sector banks (PSBs) on September 19 to discuss issues including following up on transmission of monetary policy rates.

The government is set to ask PSBs to expeditiously introduce repo-rate linked products “to step up affordable credit”, according to an agenda item of the meeting. 

The Reserve Bank of India (RBI) had earlier this month made it mandatory for banks to link all their fresh retail loans to an external benchmark, effective October 1 — the central bank’s repo rate being one such benchmark. Following the move, banks such as Punjab National Bank and Allahabad Bank announced linking their retail loans with the RBI’s repo rate.

The finance ministry will discuss ways in which PSBs can offer doorstep banking facility. Some PSBs offer doorstep banking for citizens over 70 years of age and differently-abled customers. Additionally, the ministry will discuss ways in which banks can help customers in tracking online loan applications for retail, MSME (micro, small and medium enterprise), housing, and vehicle loans, among others.  The finance ministry will ask the top management of banks to closely monitor “loans to MSMEs, small traders, SHG (self-help groups) and micro finance Institutions borrowers and collaboration of banks with non-banking financial companiesfor co-origination of loans.”

The Centre will also review the announcement made by Finance Minister Nirmala Sitharaman last month to mandate release of security documents within 15 days of loan closure. It is intended to help customers, especially in the corporate sector, who face difficulties in applying for various clearances due to pending loan repayment.

The ministry will take a stock of pooled assets of NBFCs or housing finance companies purchased by PSBs, following a one-time credit guarantee of up to Rs 1 trillion announced in the Budget 2019-20.