Govt urges state-run banks to boost lending amid economic growth push

Financial Services secretary M. Nagaraju said banks were also urged to boost credit to small businesses and improve deposit mobilisation, following a review meeting chaired by FM Nirmala Sitharaman

India's finance ministry has asked state-run banks to step up lending after the Reserve Bank of India's outsized interest rate cut earlier this month, a top government official said on Friday, a move aimed at bolstering economic growth. 

Financial Services secretary M. Nagaraju said banks were also urged to boost credit to small businesses and improve deposit mobilisation, following a review meeting chaired by finance minister Nirmala Sitharaman. 

The RBI, earlier this month, cut its key repo rate by a larger-than-expected 50 basis points, as muted inflation gave policymakers room to prioritise growth amid global economic uncertainty. 

 

The central bank's actions are aimed at propelling higher aspirational growth of 7per cent-8 per cent, RBI Governor Sanjay Malhotra said after the monetary policy announcement. 

Banks were told to increase lending in line with the projected credit growth of 13-14 per cent, a senior banker who attended the meeting said. 

Indian banks' loans rose 9.6 per cent and deposits climbed 10.4 per cent in the two wfinanceeeks to June 13 from a year earlier, the Reserve Bank of India's weekly statistical supplement showed on Friday. 

While most state-run lenders have already passed on the RBI's rate cuts, those that have not were specifically asked to reduce their lending rates, the banker added.