INSUBCONTINENT EXCLUSIVE:
The Reserve Bank of India (RBI) has called a meeting of all state-run bank chiefs on October 15, a day after finance minister Nirmala
Sitharaman is set to meet them to take stock of credit growth in the economy
The RBI top brass is set to discuss slowing credit growth, ongoing issues with non-bank finance companies, and faster policy rate
transmission among other key issues.
“We are meeting the RBI governor and deputy governors on Tuesday to discuss the current situation in
the financial system,” said one of the bank chiefs invited to the meeting
“We are also likely to discuss the progress on linking loans with the repo rate and growth of credit in the micro and medium
segments.”
Faster transmission of policy rates could top the discussion agenda
With RBI reducing policy rates so far by 110 basis points, it has been appealing to banks to lend support to the economy by transmitting the
ratecut benefits to their corporate and retail customers.
In its last monetary policy assessment earlier this month, Mint Road sharply
brought down the FY20 GDP forecast by 80 basis points — the sharpest in several years — from the 6.9 per cent projected in the August
policy.
Sitharaman will also hold a review meeting with chiefs of state-owned banks on Monday to discuss various issues, including progress
on credit offtake, credit availability to stressed non-bank lenders and MSMEs.Sitharaman had announced a series of measures including loan
outreach programmes to be undertaken before the festive season across 400 districts to push credit growth and help boost the GDP
State-owned banks were to conduct the first phase of the outreach programme across 250 districts for four days starting October 3, with the
next phase set to begin on October 21.
Banks are expected to present their report cards on the partial credit guarantee scheme and fund
raising from the market to enhance their capital bases
The Centre in August issued guidelines on operationalising ₹1 lakh crore in partial guarantee scheme under which PSBs can purchase
high-rated pooled assets of financially sound NBFCs.
India’s growth slumped to a six-year low of 5 per cent in the June quarter
Monthly automobile sales have collapsed, in some cases by as much as 50 per cent, plunging dealerships into losses and triggering job cuts
The government has announced stimulus measures and reforms, including a merger of staterun banks aimed at strengthening them and bolstering
credit expansion, to help revive growth.