Gross NPAs of PSBs increased to 3.3 per cent in 2011 -12 from 2.3 per cent in the year-ago period

Amid slowdown in economy and concerns over rising bad loans, Finance Minister P. Chidambaram will review the performance of public sector banks (PSB) on August 18.

“The meeting of Finance Minister with heads of PSU banks will deliberate on non-performing assets (NPAs), agriculture loans, credit to the infrastructure sector and matters related to human resource,” sources said.

This will be the first meeting of Mr. Chidambaram with the chiefs of PSU banks since taking over as the Finance Minister on August 1.

Economic growth slowed to a 9-year low of 5.3 per cent in the last quarter of 2011-12.

Industrial growth, as measured by IIP, contracted 0.1 per cent during the April-June quarter of the current fiscal.

Expressing concerns over these issues, Mr. Chidambaram recently indicated that he would prefer lower interest rates to spur investment and growth.

Slowdown in economy has impacted repayment capacity of borrowers. Gross NPAs of public sector banks increased to 3.3 per cent in 2011-12, from 2.3 per cent in the year-ago period.

Besides, the country is facing drought-like situation in several parts, which too could pressure on bank loans.

In its monetary policy review last month, the RBI cut growth expectations for the fiscal to 6.5 per cent, although Prime Minister’s Economic Advisory Council Chairman C. Rangarajan had pegged it at above 6.5 per cent.

Heads of public sector financial institutions such as Nabard, Sidbi, NHB, IIFCL and Exim Bank will also attend the meeting with the Finance Minister, the sources said.

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