FM to meet PSB heads tomorrow; NPAs, rate cut on agenda
New Delhi : Finance Minister Arun Jaitley will meet heads of PSU banks tomorrow to discuss various issues, including bad loans and interest rate reduction, in light of RBI lowering its policy rate in September.
The performance review meeting of public sector banks (PSBs) will also take stock of the credit flow to productive sectors to spur economy and review of ‘Indradhanush’, the seven-pronged strategy to revive PSBs, sources said.
The government in August announced the programme, which includes Rs 70,000 crore capital infusion in PSBs in four years, starting with Rs 25,000 crore this fiscal, and measures to de-stress banks by introducing governance reforms.
The gross NPAs of PSBs rose to 6.03 per cent at the end of June 2015, as against 5.20 per cent in March 2015.
According to the sources, the meeting is expected to review credit offtake by sectors such as home, education and corporates as well as the progress made under the Jan Dhan Yojana and Prime Minister’s social security schemes, among other issues.
The meeting will also examine what steps have been taken by state-owned banks in the aftermath of Rs 6,100-crore Bank of Baroda black money remittance case to avoid such episodes in future.
Jaitley is expected to review the interest rate cut by banks following reduction in the key policy rate by RBI in September.
RBI in its September bi-monthly monetary policy review had cut interest rate by a higher-than-expected 0.5 per cent. The benchmark repurchase (repo) rate has subsequently come down from 7.25 per cent to 6.75 per cent, the lowest in four-and-a-half years.
The progress of three social security schemes, namely Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri Suraksha Bima Yojana (PMSBY) and Atal Pension Yojana (APY), and the Micro Units Development & Refinance Agency (MUDRA), among others, is also likely to feature in the discussions.
According to an official statement, the major thrust areas of review would be priority sector lending, second quarter results, financial literacy, PMMY and insurance and pension schemes.
Apart from these, Ministry of MSME will discuss issues related to MSME financing, while Ministry of New and Renewable Energy (MNRE) will discuss status of commitment given by banks for funding renewable energy projects in the next five years, it said.
During the review meeting, Ministry of Food Processing would discuss utilization of special fund of Rs 2,000 crore set-up by the Ministry of Finance to provide affordable credit to designated Food Parks (including Mega Food parks) and food processing units.
Ministry of Textiles will discuss implementation of revival, reform and restructuring (RRR) package for handloom sector and institutional credit to sericulture, while Ministry of Rural Development will discuss SHG Credit Linkage Plan, among others.
The meeting would be attended by Minister of State for Finance, RBI Deputy Governor, Secretary – Department of Financial Services, Secretary or senior officials of ministries of MSME, MNRE, food processing, textiles and rural development, among others.