August 26, 2021 3:45:26 am
Finance Minister Nirmala Sitharaman on Wednesday said it was too early to conclude that there was a lack of demand for bank credit. She also announced a credit outreach programme to push bank loan growth. Year-on-year non-food bank credit growth was 6.2 percent as on July 30th.
The Finance Minister said that over Rs 4.94 lakh crore was disbursed by banks between October 2019 and March 2021 through outreach initiatives undertaken by them. This year, too, sometime in October, there will be a credit outreach in every district of the country, she added. Sitharaman was speaking at a press conference in Mumbai on Wednesday.
Sitharaman, who had met bank heads earlier in the day, said bankers had expressed concerns on CASA (current account and savings account) deposits piling up in eastern areas. She said there was a need to ramp up credit growth in states like Jharkhand, West Bengal, and Odisha.
She said she has asked banks to reach out to exporters at district level to help push Prime Minister Narendra Modi’s ‘One District, One Export’ message. Lenders have also been told to look into demands of the fintech sector.
At the same conference, Revenue Secretary Tarun Bajaj said the government is considering allowing Indian companies to directly list abroad. There are certain issues to be sorted out, he said, without going into details. The government may introduce legislative amendments in the Budget session of Parliament to facilitate direct listing, he added.
“We are in discussions with the players who are asking for this. Maybe in the Budget session we will see what we can do,” Bajaj said, adding there was no mandatory requirement of listing of such securities at the International Financial Services Centre (IFSC) at this point of time.
Sitharaman also reiterated that banks and insurance sectors have been classified as strategic sectors by the government. This means although the government will pursue disinvestment and privatisation, it won’t exit these sectors fully. “Banks, financial institutions and insurance are identified as strategic sectors which means the government’s minimum presence will be there. Minimum presence is something that has to be there as per policy. I will obviously be present in LIC, in the general insurance industry and somewhat in the re-insurance sector also,” said Sitharaman.
She also said that the government was not averse to the idea of bringing insurance bonds in place of bank guarantees. Further, the finance minister confirmed that the Indian Banks Association has approached the Reserve Bank of India for a licence for National Asset Reconstruction Company Ltd, or NARCL, the bad bank.
On rising inflation, Bajaj said it would come down once the crop harvest hits the market and consumer inflation would come down to 4-6 per cent. “The RBI has come out with a guidance on inflation and said that the inflation which is a little on the up will cool down in some time and we also feel once the crop comes out the inflation should come down. The major inflation that is being seen is in components such as edible oils and pulses and we have reduced the duties on these and have ensured that extra pulses and edible oils are coming from outside the country so that the supply side has been improved.”
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