FM to review banks' working on May 14

Wants to discuss key issues pertaining to banking sector such as asset quality, recovery of loans, credit growth and priority lending

Finance Minister P Chidambaram will review the performance of public sector banks (PSBs) at a meeting with their chiefs on May 14, two days before the results of the Lok Sabha elections are announced.

Officials said Chidambaram wanted to discuss key issues pertaining to the banking sector before a new government took charge. These issues include asset quality, recovery of loans, credit growth and priority lending.

“Besides the routine performance review, the issue of recapitalisation of banks will also be discussed during the quarterly meeting,” said a finance ministry official.

The meeting with bankers will be held a day after the Financial Stability Development Council, chaired by Chidambaram, meets on May 13. The FSDC is likely to discuss the economic situation in the backdrop of the ongoing polls.

The government is concerned about the rise in non-performing assets of banks and the finance minister may ask the banks to address the issue while taking strict action against willful defaulters.

An assessment will be made on loans extended by the banks to priority sectors such as agriculture, housing, education and micro, small & medium enterprises and financial inclusion in 2013-14.

Usually the review meeting is conducted after the financial results of the banks are declared. Since these are the annual results, not all the banks have announced their numbers yet. But as a new government would be formed after the election results are announced on May 16, Chidambaram decided to hold the meeting before that.

In his last meeting with CMDs of state-owned banks and financial institutions on March 20, the finance minister had discussed revision in PFRDA and Irda regulations to enable pension funds and insurance funds to be invested in additional tier one capital, giving a rights issue in an equal proportion to minority shareholders so that their stake in not diluted when the government infuses capital, and allowing banks to issue shares to their employees.