ideation exercise. Banks pitch for policy stability, return of DFIs for development of infrastructure

Eighteen public sector banks that came together for the two-day inter-bank ideation exercise have made a slew of suggestions to help India become a $5-trillion economy in five years.

These suggestions, which covered the 16 key performance indicators (KPIs) identified by the Department of Financial Services for bottom-up ideation exercise, include measures that are required to provide infrastructure boost and MSME development, besides improving housing and education loans and digital payments in the country.

On the infrastructure front, banks have underscored the need for policy stability, stating that long-term infrastructure projects are getting affected due to government changes at the State-level and the attendant policy changes from their end, Mukesh Kumar Jain, Managing Director and CEO, Oriental Bank of Commerce, told BusinessLine after the two-day meeting. OBC is the Delhi State-Level Bankers’ Committee (SLBC) convenor.

A case in point where absence of policy stability is affecting infrastructure projects is Andhra Pradesh, which has recently seen a government change, and some of the existing contracts for infrastructure development are getting modified or annulled. This is impacting the banks that have committed exposure to such projects, said Jain.

For infrastructure development, banks have also made a case for the reintroduction of development finance institutions (DFI) so that long-term funds are available for infrastructure development.

There was also a suggestion that a single-window clearance be provided for approval of infrastructure projects, especially given that environmental clearances are hard to come by without delays, said Jain. For MSMEs, the banks have suggested that cluster-based schemes are the need of the hour. Besides the need for online tracking of loan proposals, banks also called for capacity building and skilling of bankers on cluster-based development. India currently has more than 300 MSME clusters, and banks need to better engage with them for economic development. There was also a suggestion for mandatory registration of all MSMEs in the TreDS platform, said Jain.

On housing loans, suggestions ranged from 100 per cent digitisation of land records, and introduction of property IDs (for better use of CERSAI portal).

As regards education, banks wanted the government to encourage ‘education for all’, and suggested that interest payouts for education loans should come out of the Budget. This would boost the education sector in the country, they said. A case was also made that both educational institutions and employers should play a supporting role in recovery of education loans provided by banks.

“Banks are very much keen to give more education loans. But their only problem is the delinquency in such loans. If more such loans are recovered on a timely basis, the banks will be in a position to lend more,” added Jain.

To boost digital payments, banks suggested that individuals be provided with specific tax breaks to encourage such adoption. To check ATM frauds, it was suggested that the concept of OTP be introduced for every cash withdrawal at ATMs.

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