FM urges PSBs to hike credit to MSMEs, homeowners

In meeting with Finance Minister, banks review working of IBC, discuss ways to faster resolution

January 28, 2019 10:40 pm | Updated 10:40 pm IST - NEW DELHI

A few days before the presentation of the Vote on Account, Finance Minister Piyush Goyal on Monday held a meeting with the heads of public sector banks (PSBs) during which they discussed ways to increase support to the MSME sector and improve credit for homeowners.

During the meeting, also attended by RBI Governor Shaktikanta Das, the bankers reviewed the working of the Insolvency and Bankruptcy Code (IBC) and discussed ways by which faster resolutions could be reached.

“Today, there was a pre-decided meeting with all the public sector bank heads where, during the course of the day, they have had internal deliberations on various aspects of public sector banks,” Mr. Goyal told the media following the meeting.

“They have been able to discuss and deliberate on various measures to support the MSME sector, particularly small traders, small businesses and businesses in remote parts of the country.

“They have discussed various measures to promote finance for housing and give a thrust to homeowners to get adequate financing,” the Minister added.

Financial inclusion

“They have also discussed various ways in which the operations of the banks can become more efficient, customer-friendly, profitable as well as ensure the stated goals of this government to reach financial inclusion of every Indian.”

Mr. Goyal also said that the bankers spoke about how the working of the IBC had helped them recover large amounts of money both through the IBC mechanism and the NCLTs, and also due to the fact that many cases had been resolved without having to go through the IBC due to the pressure that is built up on large borrowers.

“They have also discussed their internal mechanisms to resolve cases under the RBI guidelines and within the framework set in the bankruptcy code and see how there can be faster resolution, more effective resolution, so that businesses can turn around and banks can turn around fast.

“They also expressed their confidence that after the government has amended the PCA Act, giving them the confidence that while anybody indulging in misfeasance or malpractices will not be spared but genuine commercial decisions taken by bankers will also be protected,” the Finance Minister said.

On the part of the government, Mr. Goyal said that he assured all the PSBs that the government is fully backing every one of the 21 banks and would like to encourage them to do effective banking for all the small businesses, particularly the MSME sector, for homebuyers, and would like them to look at ways to improve delivery of services to farmers.

“The sum and substance of today’s meeting is that we are going to see a far more vibrant, more proactive and far more profitable banking sector in the days to come,” Mr. Goyal concluded.

The bankers also held a separate meeting with Mr. Das, during which the Governor conveyed the expectations of the RBI and heard their views of the banking sector’s performance.

“Basically, the idea was to share with the PSBs, their MDs and CEOs, what the regulator’s expectations are from the banking sector and also to listen to them about their assessment of the banking sector in general and the public sector banks in particular and what is their take on the future of the public sector banks,” Mr. Das told the media after the meeting.

The Vote on Account is to be presented on February 1, while the RBI’s monetary policy review is scheduled for February 7.

Banks also committed to step up their efforts for financing under Pradhan Mantri Awas Yojana which is aimed at securing Housing for All by 2022, the government said in a release.

“PCA banks were advised to maintain the trend of improvement in performance, with a view to bringing them out of the PCA framework at the earliest,” said a release.

“In this connection, the significant reduction in NNPAs and significant de-risking of their credit portfolios during the current financial year were taken note of.”

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