Money & Banking

FM expects credit demand to pick up soon

BL New Delhi Bureau | | | Updated on: Jan 07, 2022

Finance Minsiter Nirmala Sitharaman | Photo Credit: SHIV KUMAR PUSHPAKAR

Business outlook improving despite global headwinds, Omicron spread: Sitharaman

Finance Minister Nirmala Sitharaman on Friday said that credit demand in the country is expected to soon pick up on account of growth in the retail segment, improvement in overall macroeconomic prospects and improving the financial health of borrowers.

Addressing a virtual review meeting with chiefs of public sector banks, Sitharaman also noted that business outlook is progressively improving despite the headwinds from global development and Omicron spread.

Credit growth in the banking system is widely expected to grow this fiscal year at about 7.7 -8 per cent, higher than the previous year’s performance, according to research outfits. This credit growth could bump up to 12 per cent next fiscal as the economic recovery gathers full steam, they said.

Meanwhile, the Finance Minister at the review meeting underlined that contact intensive sectors might require more support to help them fight against the pandemic.

She also urged bankers to continue supporting the agriculture sector, farmers, retail sector and MSMEs.

Pandemic measures assessment

During the review meeting, Sitharaman assessed various steps taken by PSBs in implementing pandemic-related measures initiated by the Government and Reserve Bank of India (RBI) and readiness to tackle possible future disruptions that may occur due to the ongoing variant of the Covid-19 pandemic.

While appreciating the success of ECLGS, Sitharaman also said that it is not time yet to rest on “our achievements and that our collective efforts must strive towards supporting sectors that face interruption due to continued onslaught of Covid-19 pandemic”.

At the review meeting, bankers pointed out that PSBs have observed an improvement in the repayment culture in the country.

PSBs have performed well and, supported by various policy measures, provided the required impetus to the economy for coming out of shackles of pandemic induced stress.

Prepared for stress scenarios

In assessing the overall situation, bankers were confident that PSBs are adequately capitalised, and banks are prepared for any stress scenarios in the future.

The Finance Minister also attributed the success of ECLGS to the collective efforts of the banking community.

In his address, Bhagwat Karad, Minister of State for Finance, said that PSBs are the power engines of the economy and congratulated the bankers for their performance during the pandemic times.

Earlier, at the start of the review meeting, SBI Chairman Dinesh Kumar Khara gave an in-depth presentation on the pre-pandemic and current scenario of banking business to the Finance Minister. Later, CMDs/MDs of various PSBs also shared their views on the overall assessment of the banking business and gave various suggestions for the overall growth of business.

Published on January 07, 2022
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