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Shrugging off criticisms on the country’s current economic situation, Finance Minister P Chidambaram on Tuesday painted a bright picture of the economy.
In a meeting with public sector banks and financial institutions here, Chidambaram listed the rising number of applications seeking bank loans, good credit flow into some sectors and the higher-than-expected inflow of foreign exchange reserves into banks as positive signs.
New proposals
Contrary to the perception that companies were not making new investments, Chidambaram said public sector banks had received around 170 projects/proposals with an investment of Rs 250 crore or more in each during the past six months (April-September 2013). These include Tata Steel Odisha Ltd’s proposal worth Rs 43,149 crore, ONGC Petro Additions Ltd’s Rs 21.396 crore, Krishnapatnam Port’s Rs 4,931 crore and Orient Cement Ltd’s Rs 1,718 crore.
Various projects approved by the Cabinet Committee on Investment and being monitored by the Project Management Group are also being implemented, he said. “Promoters have been asked to tighten loose ends.”
Banks have brought in around $9 billion from two foreign schemes announced in September to attract foreign funds and help the country bridge the widening current account deficit (CAD).
Forex inflow
CAD is the difference between a country’s import and exports of goods, services and transfers,
“Banks have taken advantage of the Reserve Bank of India’s liberalisation of FCNR-B (foreign currency non-resident bank scheme) and tier-I capital schemes. So far, under the two schemes put together, banks have brought in $9.6 billion,” Chidambaram said. Soon after taking over as RBI Governor on September 4, Raghuram Rajan had announced opening of a swap window facility to encourage banks to attract NRI funds.
Under the facility, banks are permitted to swap new FCNR-B dollar funds, mobilised for a minimum tenure of three years at a fixed rate of 3.5 per cent a year. Also, Rajan relaxed norms for banks and allowed them to raise capital abroad to the tune of 100 per cent of their tier-I (equity) capital. The schemes will remain valid till November 30.
Sectoral credit growth
Chidambaram said housing loans recorded 42 per cent and 61 per cent growth in the first and second quarters this year, respectively.
Growth was also seen in education loans, he said, adding banks had been asked to meet the lending target with regard to minorities.
Public sector banks would open 10,000 new branches and set up 34,668 onsite ATMs during this financial year. This will enable each branch to have an ATM, the Minister added.
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