Sinha, Psb Chiefs Meet On Nov 12

Finance minister Yashwant Sinha has called a meeting of the heads of all public sector banks (PSBs) on November 12 to take stock of the situation arising out of the economic slowdown gripping the country.

The meeting will also discuss the status of the banks non-performing assets, priority sector lending especially with reference to flow of credit to the small scale industries (SSIs) and the post-VRS operational issues.

The meeting assumes significance as it comes just week before Parliament convenes for the Winter Session on November 19. It also being held at a time when the non-performing assets (NPAs) of the banking sector, currently pegged at around Rs 55,000 crore, are in danger of burgeoning further in view of the economic slowdown.

"In the current climate of economic stagnation, banks are faced with dual challenges - on the one hand there are not enough bankable projects coming up while on the other existing clients in some of the industry/service sectors are facing the brunt of a global recession, which could see them turn into NPAs," said a senior banker.

The non-food credit offtake, which is a barometer of the productive economic activity in the country, is another matter of concern that will need to be addressed in the light of the recent cut in the bank rate, according to sources. The growth in non-food credit offtake in the financial year so far has been sluggish at Rs 20,894 crore as against Rs 35,018 crore in corresponding period of the previous year.

In regard to the credit and priority sector lending, the flow of credit to the small scale sector will come under the lens. Bankers are expecting the finance ministry to ask them to step up financing of viable/ existing projects in the tiny and village sectors.

"In view of the comprehensive policy package announced last year by the government for SSIs, there is need to strengthen the sector and enhance its competitiveness, both domestically and globally. This end can be achieved only through easy access to credit, availability of collateral free composite loans, capital subsidy for technology upgradation and improved infrastructure," the banker said.

The minister is also expected to take stock of the recoveries especially with regard to the one-time settlement of sticky loans for the PSBs, which concluded on September 30.

Operational issues in the post-VRS scenario will also come up for deliberations, sources pointed out. With the government winding up the Banking Recruitment Service Boards (BSRBs), the Centre is expected to get a feedback on the broad guidelines issued by it on September 19, 2001, on how to go about recruitments.