Nirmala Sitharaman reviews performance of banks with top management

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Finance Minister Nirmala Sitharaman on Thursday reviewed the performance of the banks, in a meeting with the top management of Public Sector Banks.

Sitharaman reviewed at length the implementation of series of measures, following extensive stakeholder consultations, announced since August 23, 2019, including consolidation, to support economic growth. A number of these related to the banking sector and progress in implementation of these was reviewed yesterday with chief executives of Public Sector Banks, a press statement said.

Discussion held on the performance of the banks was carried out with focus on supporting credit needs of the economy, in particular the needs of sectors such as NBFCs, HFCs, MSMEs, sectors under stress and enabling better access to cheaper credit, the statement said.

At the end of August 2019, overall credit growth in the banking sector stood at 10.1% on year-on-year basis. This is in parallel with record recoveries and cleaning of bank balance-sheets showing better quality of asset book, the statement added.

Banks loan disbursement to key sector remains robust, with disbursement of Rs. 11.83 lakh crore done for MSME sector in FY 2018-19 as against Rs. 8.53 lakh crore done in FY 2017-18.  Bank have also continued to support housing sector by disbursing Rs. 2.19 lakh crore for home loans in FY 2018-19 as against Rs. 1.81 lakh crore in FY 2017-18, it said.

Pool buy-out of NBFC/HFC post Sep-18 till 15th Sep-19 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.

To support decision-making and to prevent harassment for genuine commercial decisions by bankers, CVC has issued directions that Internal Advisory Committee in banks that would classify cases as vigilance and non-vigilance along with setting up of an advisory Board for first level examination to decide whether the case is a criminal act or a genuine commercial decision and accordingly, recommending the future course of action for large fraud cases above Rs. 50 crore. This will instill a sense of protection among bankers from prosecution for genuine decisions and promote lending and Public Sector Bank heads expressed their resolve to take prudent commercial decision without any fear now, it said.

Since the announcement of consolidation of public sector banks on August 30, 2019 Boards of all ten banks have accorded in-principle approval to the proposals. Heads of concerned banks assured Finance Minister that there will not be any disruption in credit decision making due to process of amalgamation and also that open communication to the employees and customers is being carried out for maintaining business as usual. The employee interests are being protected through best of benefits and learning and growth opportunities for the employees.