On Monday, Finance Minister Nirmala Sitharaman will hold a meeting with chief executives of public sector banks (PSBs) and the Chairman of State Bank of India to review the credit flow into the economy from these banks.

The meeting, which comes amid the lockdown, will review the credit sanction and disbursements since March 1 this year.

It will also look at Covid-19 related sanctioned/pre-approved emergency credit and reassessment-based additional working capital, it is learnt.

Rate transmission

Also on the agenda is a review of the support given to NBFCs (credit as well as TLTRO) along with details of the number of NBFCs supported and assistance to micro finance institutions. The crucial issues of credit support to MSMEs, interest rate transmission to borrowers and progress under TLTRO (availment and deployment) and the state of moratorium will be discussed at the meeting.

The meeting is also significant given that there is strong perception in industry circles that banks continue to be risk-averse and prefer to park a substantial portion of the liquidity infused by the RBI, as part of Covid-19 relief measures, back into the reverse repo window of the central bank. Indian banks, on an average, have been parking as much as ₹7-8-lakh crore every day during the last few days in the reverse repo window, say banking industry observers.

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