Finance Minister Nirmala Sitharaman said that banks should restrict themselves to retail lending rather than project lending in the long run.

“In the long run, if they take a clear route, that’s what they should be doing,” she said. She added that it cannot happen immediately. “But eventually, they may have to reset their business which is less on long term risk-ridden infrastructure and more on core banking,” she said.

Sitharaman said that the government is very clear that banks should focus on core banking activity and not go for high-risk development and infrastructure lending.

She said that the National Bank for Financing Infrastructure and Development (NaBFID) was brought on board for long-term financing and that too with deep pockets. She said that the government was very clear that public sector banks or scheduled commercial banks should not lend for long term from the money borrowed for short term and get into an asset-liability mismatch situation.

“We don’t expect banks to any longer do anything other than their typical core banking job. They should lend money, make money out of that and keep lending,” she said.

Click here to read the complete interview.

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