FM rules out budgetary

NEW DELHI, JANUARY 12: Finance Minister Yashwant Sinha today said banks will have to find their own resources for a re-capitalisation prog...

NEW DELHI, JANUARY 12: Finance Minister Yashwant Sinha today said banks will have to find their own resources for a re-capitalisation programme.

quot;It is difficult for me to provide resources in the budget for re-capitalisation of banks. You will have to find other measures,quot; Sinha told chief executives of public sector banks here.

Sinha also hinted at pressures from government on the public sector banks and said banks chiefs would perhaps want to talk on how to reduce them. On interest rates, Sinha said ways should be found to reduce intermediation and transaction costs in order to be able to lessen its impact on interest rates.

Stating that measures should be put in place to facilitate RBI in determining the interest rate, Sinha said the meeting should deliberate on ways to determine a system wherein banks have greater freedom in fixing interest rates in respect to the needs of the market.

quot;I have received suggestions that it interest should be a few percentage points above the rate of inflation. Some have said it should be about 3 per cent more than inflation,quot; he said adding ways should be worked out to calibrate the interest rates.

Finance Minister said the bank chiefs and other institutions should also evolve an automatic mechanism for fixation of interest rates without quot;the government doing something or the RBI doing somethingquot;.

On the spread of the kisan credit card, Sinha said he was quot;dismayedquot; by the figures that suggest quot;we are still far from meeting the annual targetquot; and urged upon the banks to do the needful.

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quot;Since I have devised this scheme, I am paternally attached to itquot;, he said adding that during his pre-budget meeting with the agriculturists it was pointed out that the kisan credit card had proved useful for the farmers.

quot;We should make this the single most important instrument of rural credit so that the farming sector does not complain any more of neglectquot;, he said.

On the rising non performing assets NPAs of the banks,sinha said during the last four years ending March 1999 it has accumulated to Rs 10,000 crore with 1998-99 financial year alone accounting for Rs 6,000 crore.

Sinha also called for a review of the settlement advisory committee for providing small loans. He lauded the achievements of the public sector banks and said with their inherent strength, they would be able to successfully face global competition.