The ongoing uncertainty in the Euro zone is a matter of concern and has to be watched closely by other countries of the world, including emerging markets, and India is not an exception. If the current precarious situation goes from bad to worse, India's economy could also experience slowdown, Union Minister of State for Finance Namo Narain Meena said here on Friday.
Delivering the inaugural address at the three-day Bancon 2011 organised by Indian Overseas Bank in association with the Indian Banks Association (IBA), he said: “Against this backdrop the Indian economy needs to brace up for a difficult year from a macro economic prospective. With weak supply response, inflation remains an important macro economic talent.”
Later speaking to reporters, he said the Union Finance Ministry had approved Rs.14,000 crore as part of recapitalisation of public sector banks for 2011-12.
The banks had asked for Rs.18,000 crore. The Minister also said that the banks had sought another Rs.19,000 crore for 2012-13.
Noting that the banks have posted good performance during the first quarter, he said that the main concern in the minds of bankers and policy makers alike was the probability of further deterioration in the asset quality. Similarly, retail loan portfolio also required close monitoring.
Overall trends in non-performing assets (NPA) did not indicate any serious systemic problem. Gross NPA (GNPA) ratio of scheduled commercial banks increased only marginally from 2.35 per cent at end-March 2011 to 2.52 per cent by end of June 2011.
However, against the backdrop of tight interest rate regime, the chances of further deterioration in asset quality cannot be ruled out completely.
From the second quarter results, a clear picture could emerge for evaluating the situation and taking appropriate action.
Regarding the implementation of Basel III in India, he said the availability of adequate amount of capital provided significant comfort for the implementation of the new framework as per the time schedule.
Saying even after three years, the percentage of credit flow to Micro Small Medium Enterprises (MSMEs ) remained at 11 per cent, he asked bankers to improve the flow of credit to this vital employment sector of the economy.
To mark the occasion, he launched the Micro One Scheme, IOB Platinum Debit Card and opened 50 branches and 75 ATMs across the country. He launched a book, ‘IOB's Platinum Moments and Thoughts', and IBA-McKinsey report.
Indian Overseas Bank founder's son and grandson were honoured by Mr. Meena and IOB Chairman and Managing Director M. Narendra.
IBA Chairman M.D. Mallya spoke.
