Sinha To Meet Fi Chiefs On January 9

Finance minister Yashwant Sinha is set to kick off his pre-budget meetings with India Inc and the financial sector in the second week of January. His meeting with the financial sector is slated to take place on January 9.

The meeting will be attended by the chiefs of financial institutions as well as chairman of the Indian Banks' Association (IBA).

Financial institutions are expected to provide valuable inputs to Sinha as they have the ring side view of the economic slowdown. The sector is facing poor credit offtake despite a low interest rate environment.

In contrast, the banking sector has seen higher deposit mobilisation to the tune of Rs 99,363 crore in April-November period. Deposit mobilisation during the comparable period last year was Rs 79,290 crore.

 

Non-food credit off-take till November 30 in the current financial year has been to the tune of Rs 25,868 crore as against Rs 34,219 crore during the corresponding period of the last financial year. Total lending to the corporate sector (inclusive of banks' subscription to the corporate debt papers and shares) by the banking sector was lower this fiscal at Rs 30,257 crore against the corresponding figure of last fiscal at Rs 38,486 crore.

Even the 50 basis point cut in the bank rate by the Reserve Bank of India on October 22 failed to stimulate the credit off-take.

The low industrial growth was mainly responsible for a poor credit off-take. Industrial growth continued to be low at 1.9 per cent year-on-year during October this year, as compared to a growth rate of 6.8 per cent during the same month last fiscal. The lacklustre growth rate has been chiefly on account of the dismal performance of the manufacturing sector.

In the banking sector, as the interest income was not good, trading profit from the government security and the forex market was the highlight of the banks' balance sheet followed by the fee based income.