FM to meet PSU bank chiefs today for review
India’s growth slumped to a six-year low of 5 per cent in the June quarter.
“We are meeting the RBI governor and deputy governors on Tuesday to discuss the current situation in the financial system,” said one of the bank chiefs invited to the meeting. “We are also likely to discuss the progress on linking loans with the repo rate and growth of credit in the micro and medium segments.”
Faster transmission of policy rates could top the discussion agenda. With RBI reducing policy rates so far by 110 basis points, it has been appealing to banks to lend support to the economy by transmitting the ratecut benefits to their corporate and retail customers.
In its last monetary policy assessment earlier this month, Mint Road sharply brought down the FY20 GDP forecast by 80 basis points — the sharpest in several years — from the 6.9 per cent projected in the August policy.
Sitharaman will also hold a review meeting with chiefs of state-owned banks on Monday to discuss various issues, including progress on credit offtake, credit availability to stressed non-bank lenders and MSMEs.
Sitharaman had announced a series of measures including loan outreach programmes to be undertaken before the festive season across 400 districts to push credit growth and help boost the GDP. State-owned banks were to conduct the first phase of the outreach programme across 250 districts for four days starting October 3, with the next phase set to begin on October 21.
Banks are expected to present their report cards on the partial credit guarantee scheme and fund raising from the market to enhance their capital bases. The Centre in August issued guidelines on operationalising ₹1 lakh crore in partial guarantee scheme under which PSBs can purchase high-rated pooled assets of financially sound NBFCs.
India’s growth slumped to a six-year low of 5 per cent in the June quarter. Monthly automobile sales have collapsed, in some cases by as much as 50 per cent, plunging dealerships into losses and triggering job cuts.
The government has announced stimulus measures and reforms, including a merger of staterun banks aimed at strengthening them and bolstering credit expansion, to help revive growth.