FM to review performance of public sector banks
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The Finance Minister Arun Jaitley will Monday meet chief executives of public sector banks (PSBs) to review banks' performance during the second quarter this fiscal besides other thrust areas like credit flow and priority sector lending.
This meeting - - probably for the first time--would see several ministries like Medium, Small and Micro Enterprises(MSME), Ministry of New and Renewable Energy (MNRE) , Ministry of Food Processing and Ministry of Textiles discuss with bank Chiefs funding related issues affecting their sectors.
While Ministry of MSME will discuss issues related to MSME financing, the Ministry of MNRE will discuss status of commitment given by banks for funding of renewable energy projects in the next five years.
The Ministry of Food Processing would discuss utilisation of special fund of Rs 2,000 crore set up by the Finance Ministry to provide affordable credit to designated food parks (including mega food parks) and food processing units located therein.
Ministry of Textiles will discuss implementation of revival, reform and restructuring package for handloom sector and institutional credit to sericulture while Ministry of Rural Development will discuss SHG credit linkage plan among others.
Monday's meeting will also see review of credit flow to productive segments of the economy besides status of Indradhanush, the seven pronged strategy announced in August this year to revamp functioning of Public Sector Banks.
Jaitley is also expected to review the extent of lending rate cuts undertaken by PSBs post the RBI move in September this year to go in for a higher-than-expected 0.5% cut in policy rate.
The RBI's benchmark repurchase rate (repo) has come down from 7.25 per cent to 6.75 per cent, the lowest in four-and-a-half years.
NPA WORRIES
Jaitley is also expected to review the banking sector's bad loan situation. Bank NPAs hit 10 year high in the September quarter.
Gross NPAs for banks, including restructured assets, stand close to 12 percent-- a level seen in 2002-03.
The gross NPAs of 19 banks touched a high of Rs 2.6 lakh crore in September (Rs 2.3 lakh crore in March 2015).
Banks have started to seriously look at selling a portion of their non performing loans to asset reconstruction companies.
Meanwhile, gross NPAs of only two banks --Allahabad Bank and Punjab National Bank--had seen dip in September quarter over March. (The Hindu Business)
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