New Delhi: After reviewing the health of the public sector banks (PSBs) with their chiefs, Finance Minister Nirmala Sitharaman on Thursday said the Centre has asked all PSBs to lend more.
In a move provide more credit to borrowers, including homebuyers and farmers, she said PSBs would hold ‘shamiana meetings’ with non-banking financial companies (NBFCs) and retail borrowers in 400 districts beginning next week. “The public meetings will be held in two tranches. The first will be held between September 24 and September 29 in 200 districts, and another 200 districts will be covered between October 10 and October 15,” she said.
“Schedule banks will now show that they are indeed pushing liquidity to the NBFCs or directly to the customer,” she said.
“The idea behind this move is to ensure maximum credit disbursal during the festive season. Diwali, which falls in October this year, is considered as the biggest shopping season of the country,” she added.
During the public meetings, the government said that the credit would be provided for retail, agriculture, MSME and housing sector, among others. The minister also announced that banks have been asked not to declare any stressed MSME loan as NPA till March 31, 2020.
A government statement said banks’ loan disbursement to key sector remained robust, with disbursement of Rs 11.83 lakh crore done for the MSME sector in FY19 as against Rs 8.53 lakh crore in FY18. Banks disbursed Rs. 2.19 lakh crore for home loans in FY19 as against Rs 1.81 lakh crore in FY 2017-18, the statement said.
Pool buy-out of NBFC/HFC post Sep-18 till September 15, 2019 was Rs. 93,018 crore, including Rs 9,155 crore under the newly launched Partial Credit Guarantee Scheme. Proposals of another Rs. 33,200 crore under the new scheme are also in the pipeline, it added.
The finance minister also said that a lot of discussions happened over enhancing liquidity for NBFCs. “We did review as to actually what has happened in terms of liquidity moving from banks to NBFCs and from NBFCs to the customers who need the money. That took a lot of our discussion time,” Sitharaman said.
However, the statement added that following the announcement on August 23, 2019, banks have already entered into 14 tie-ups with NBFCs for co-originating loans, with another 36 such tie-ups in the pipeline. “This will help borrowers in terms of better access to affordable credit, while yielding business benefits to both banks and NBFCs,” it said.
“Banks have identified such NBFCs whom they can straight away lend. Some of that has already started happening, while some are in the pipeline,” she further said, adding the discussion was in great detail and banks have started doing a lot on the announcements that were made and on some of the budgetary provisions.
Citing the central bank’s circular on bad loan norms, she also said that government has asked banks not to declare any stressed MSME as non-performing asset or NPA till the end of this fiscal. “If there is some stressed assets in any MSME, we have asked banks to rework loans and lend more,” said the finance minister.