Finance Minister Reviews Performance Of Banks With Top Management Of Public Sector Banks

Nirmala Sitharaman, Union Minister of Finance & Corporate Affairs reviewed the performance of the banks in a meeting with the top management of Public Sector Banks. The FM reviewed at length the implementation of series of measures, following extensive stakeholder consultations, announced since 23.8.2019, including consolidation, to support economic growth. A number of these related to the banking sector and progress in implementation of these was reviewed with chief executives of Public Sector Banks.

Discussion on the performance of the banks was carried out with focus on supporting credit needs of the economy, in particular the needs of sectors such as NBFCs, HFCs, MSMEs, sectors under stress and enabling better access to cheaper credit. At the end of August 2019, overall credit growth in the banking sector stood at 10.1% on year-on-year basis. This is in parallel with record recoveries and cleaning of bank balance-sheets showing better quality of asset book.

Banks loan disbursement to key sector remains robust, with disbursement of Rs. 11.83 lakh crore done for MSME sector in FY 2018-19 as against Rs. 8.53 lakh crore done in FY 2017-18. Bank have also continued to support housing sector by disbursing Rs. 2.19 lakh crore for home loans in FY 2018-19 as against Rs. 1.81 lakh crore in FY 2017-18. Pool buy-out of NBFC/HFC post Sep-18 till 15th Sep-19 was Rs. 93,018 crore, including Rs. 9,155 crore under the newly launched Partial Credit Guarantee Scheme. Proposals of another Rs. 33,200 crore under the new scheme are also in the pipeline.

Following the announcement on 23rd August 2019, banks have already entered into 14 tie-ups with NBFCs for co-originating loans, with another 36 such tie-ups in the pipeline. This will help borrowers in terms of better access to affordable credit, while yielding business benefits to both banks and NBFCs. Acting upon their commitment to review lending rates in the context of policy rate cuts, Public Sector Banks have effected weighted average rate cuts of 27 basis points till August 2019 and another 10 out of the 18 Public Sector Banks have effected additional rate cuts ranging from 15 to 5 basis points in the current month.

Further, to enable automatic transmission of externally benchmarked rates, 15 Public Sector Banks have already introduced Repo-rate-linked loan products for housing and vehicles, consumer credit, cash credit limits and mortgage-based loans. To support decision-making and to prevent harassment for genuine commercial decisions by bankers, CVC has issued directions that Internal Advisory Committee in banks that would classify cases as vigilance and non-vigilance along with setting up of an advisory Board for first level examination to decide whether the case is a criminal act or a genuine commercial decision and accordingly, recommending the future course of action for large fraud cases above Rs. 50 crore.

Since the announcement of consolidation of public sector banks on 30.8.2019, Boards of all ten banks have accorded in-principle approval to the proposals. Heads of concerned banks assured Finance Minister that there will not be any disruption in credit decision making due to process of amalgamation and also that open communication to the employees and customers is being carried out for maintaining business as usual. The employee interests are being protected through best of benefits and learning and growth opportunities for the employees.

Powered by Capital Market - Live News