Prime Minister Narendra Modi on Wednesday joined a meeting with heads of banks and NBFCs, where the need for introspection among bankers in order to ensure “bankable projects” do not suffer from lack of credit in the name of past non-performing assets (NPAs) was discussed.
While the Centre emphasised it will support the banking system, it was noted that “small entrepreneurs, SHGs, farmers should be motivated to use institutional credit to meet their credit needs and grow”.
“Each bank needs to introspect and take a relook at its practices to ensure stable credit growth. Banks should not treat all proposals with the same yardstick and need to distinguish and identify bankable proposals and to ensure that they get access to funding on their merit and don’t suffer in the name of past NPAs,” the Prime Minister’s Office (PMO) said in a statement after Wednesday’s meeting.
“It was emphasised that the government is firmly behind the banking system. The government is ready to take any steps necessary to support it and promote its growth,” it added.
Wednesday’s meeting comes amid demands by banks and non-banking financial companies (NBFCs) seeking additional liquidity for lower rated companies, alongside one time restructuring of loans to support them during the present downturn.
The Centre has utilised the financial system to inject liquidity and a major portion of the over Rs 20 lakh crore Atmanirbhar Bharat package, comprising of banks providing loans to micro, small and medium enterprises (MSMEs) and the Reserve Bank of India providing systemic liquidity and other regulatory concessions.
The meeting discussed ways to increase credit penetration through collaborative use of digital technologies.
“Banks should adopt fintech like centralised data platforms, digital documentation and collaborative use of information to move towards digital acquisition of customers. This will help increase credit penetration, increase ease for customers, lower costs for banks and also reduce frauds,” the PMO statement said.
While reviewing the existing loan schemes, the government said that banks need to be proactive and actively engage with the intended beneficiaries to ensure that the credit support reaches them in a timely manner.
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