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Finance Minister Nirmala Sithraman has called a meeting of all the public sector banks on Monday (October 14).
In a meeting notice to Chairman, State Bank of India, and Managing Director-Cum-Chief Executive Officers of all nationalised banks, seven items have been listed. These include progress of credit growth, fund flows to NBFCs (Non-Banking Financial Companies), progress of outreach program, progress of partial credit guarantee scheme, progress of raising funds from market, funding of MSMEs (Micro, Small and Medium Enterprises) and progress of 59 minutes scheme.
This review meeting is taking place at a time when economy is facing challenges. Even the RBI has sharply lowered its growth projection for the current fiscal to 6.1 per cent, which is the lowest among various agencies.
In his statement after Monetary Policy Committee meeting on October 4, RBI Governor Shaktikanta Das highlighted the slowdown in various sectors. He said that the slump in real GDP growth to 5 per cent in the first quarter of 2019-20 has been followed by generally weaker high frequency indicators for the second quarter. Industrial production was lower in July 2019 on a year-on-year basis, pulled down mainly by manufacturing.
Data from RBI shows that credit growth during first six months of the current fiscal for all scheduled commercial banks have been 10.3 per cent, below expectation. Though, there have been some improvement in NBFCs and banks are providing liquidity, but still they are not in a situation to boost lending for consumer goods. Meanwhile, the government is hopeful that Partial Credit Guarantee Scheme will help these financial institutions.
The banks are expected to raise the issue of getting benefit of lower tax regime as announced on September 20. It is believed that since banks are not manufacturing companies, they will not get the benefit of new tax regime.
Also, there are reports that Revenue Department has turned down proposal from the Department of Financial services to expand the benefit to banking companies.
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