FM to meet PSB heads to discuss NPAs, rate cut

Performance review meeting will also take stock of credit flow to productive sectors to spur economy

Finance Minister Arun Jaitley will meet heads of public sector banks (PSBs) on Sunday to discuss bad loans and interest rate reduction, in light of the Reserve Bank of India (RBI) lowering its policy rate in September.

The performance review meeting will also take stock of credit flow to productive sectors to spur the economy and review of Indradhanush, sources said.

The gross non-performing assets (NPAs) of PSBs rose to 6.03 per cent at the end of June, as against 5.2 per cent in March.

According to sources, credit offtake by sectors such as home, education and corporates as well as progress made under the Jan Dhan Yojana and Prime Minister’s social security schemes are also to be reviewed.

The meeting will also examine steps to be taken by state-owned banks in the aftermath of the Rs 6,100-crore Bank of Baroda black money remittance case to avoid such episodes in future.

Jaitley is expected to review the interest rate cut by banks following reduction in the key policy rate by RBI in September.

RBI in its September bi-monthly monetary policy review had cut interest rate by a higher-than-expected 0.5 per cent. The benchmark repurchase (repo) rate has subsequently come down from 7.25 per cent to 6.75 per cent, the lowest in four-and-a-half years.

The progress of three social security schemes, namely Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri Suraksha Bima Yojana (PMSBY) and Atal Pension Yojana (APY), and the Micro Units Development & Refinance Agency (MUDRA), among others, is also likely to feature in the discussions.