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PSU banks kick off nationwide exercise to boost credit demand across sectors

The Department of Financial Services initiated the multi-level consultation process in all PSU banks even as the government proposed measures measures to boost lending to revive the economy which is facing a slowdown.

By: ENS Economic Bureau | Mumbai | Published: August 19, 2019 4:06:50 am
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With credit demand remaining subdued, public sector undertaking (PSU) banks Sunday began a major initiative to identify and finalise ways and means to increase credit to various sectors of the economy, enhance use of technology to bring about innovation and enable big data analytics.

State Bank of India (SBI) conducted a discussion session including branches within the jurisdiction of all 524 regional offices to generate ideas and review the bank’s performance aligned with national priorities. In Mumbai, at the bank’s Regional Business Office, the discussion session was attended by Arjit Basu, MD (Corporate Client Group and IT), SBI, and other senior officials.

SBI chairman Rajnish Kumar said credit demand remains subdued and there is a need for stimulus in the economy. Though lack of credit demand exists in the economy, there is no supply-side constraint as the PSU banks are more or less well-capitalised, he further said. “Demand for credit in the economy is subdued. There is a need for stimulus in the economy,” Kumar said in Kolkata after attending the multi-level consultation programme with branch managers of SBI in the region.

“There is no supply-side constraint. More or less, the public sector banks are well-capitalised and bank rates also moderated.”

Explained

Banks’ delay in cutting rates remains a concern

The meeting comes at a time when credit demand remains subdued and banks have been facing the charge of not passing on the full extent of the easing of the policy rates. The RBI had cut the repo rate by 75 basis points between February and June, but banks have reduced their interest rates on fresh rupee loans by 29 basis points.

The Department of Financial Services initiated the multi-level consultation process in all PSU banks even as the government proposed measures measures to boost lending to revive the economy which is facing a slowdown.

“SBI collectively identified many implementable and innovative suggestions which can help to improve bank’s performance and establish future roadmap,” said another official. These suggestions were collated and sent to the regional/zonal level for further discussions at the state level bankers’ committee, along with comparative performance assessment of the branches under each region, the public sector bank said.

SBI has decided to later take final consultation at the national level to compare both intra- and inter-bank performances and finalise suggestions about the way ahead for implementation across PSU banks. “The consultative process has resulted in a renewed sense of involvement and purposes down to the branch level and the bank is geared towards implementing the roadmap for the further, improve its performance and align itself to national priorities so that it may fulfill its mandate of partnering the Indian growth story,” SBI said.

According to Indian Bank, which held the review meeting in Mumbai, the discussions ranged from area specific issues affecting the growth of business of branches, opportunities and growth potential available, requirements of customers, and improving digitalisation.

“Detailed discussions were held on bank lending to MSME sector including lending under Stand Up India, Mudra loans, PSB loans. Other areas like retail lending, digital transaction for both convenience and outreach were touched upon,” the bank said.

Bank of India (BoI) said its branches were engaged in self-assessment, deliberated on the issues and evolved ideas on future strategy. The idea is to make banking citizen-centric as well as more responsive to the needs and aspiration of senior citizens, farmers, small industrialists, entrepreneurs, youth, students and women, it said. AK Das, executive director, BoI said, “Several topical themes were discussed during the meet with a view to chart out specific roadmap for PSU banks.”

Though the Reserve Bank of India had cut the repo rate by 75 basis points between February and June, banks have reduced their interest rates on fresh rupee loans by 29 basis points so far (February-June 2019).

“Our interactions with various stakeholders, including both public sector and private sector banks, indicate that steps are being taken by them on an ongoing basis to progressively lower their interest rates so that the benefits of the policy rate reductions are passed on to the economy. Accordingly, we expect higher transmission of monetary policy actions and stance by the banks in the weeks and months ahead,” RBI Governor Shaktikanta Das had said while unveiling the monetary policy earlier this month.

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