FM to review PSU banks' performance today

Finance Minister P Chidambaram will review the performance of PSU banks today on various parameters like lending to the priority, agriculture & SME sectors and the first-half results.

Heads of all the 17 nationalised banks, SBI and associates and IDBI will attend the review meeting, besides representatives from the Reserve Bank, Indian Banks' Association and Nabard, a banking source said here on Sunday.

Credit flow to agriculture, SMEs and the financial performance in the first half are the main issues to be discussed during the meeting.

As per the targets, all public sector banks are required to have 40% of their total loan exposure in the priority sector and at least 18% in agriculture.

On the financial performance front, except State Bank of India, most of the PSU banks have come out with good net profit figures in the second quarter of this fiscal due to increase in lending rates and non-interest income.

Various banks have signed letters of intent with the Finance Ministry stating targets including business and profits for the entire fiscal.

The Finance Minister will also be informed of the action taken on the decisions made in the earlier meeting held with the bankers on July 21, 2006.

The current interest rate scenario after the Reserve Bank raised short term lending rate by 0.25% on Tuesday, is also likely to figure in the meeting.

Through the repo rate hike, RBI has signalled to the banks that they should not lend excessively and manage their liquidity properly as borrowing from RBI will not come cheap.