Concerned over the slow economy, and low credit growth, the government has pushed public sector banks (PSBs), which are at the forefront of lending to agriculture, MSMEs, MUDRA, Loans in 59-Minutes, among others, to brainstorm and come up with solutions.
PSBs have been struggling with bad loans and the government has been spending continuously on recapitalising them with the Union Budget 2019 setting a fresh capital infusion of Rs 70,000 crore.
PSB branches across India have burnt the midnight oil over the weekend to review issues concerning credit growth, policy framework, gaps in implementation, and challenges they face at the branch level. There are over 1,700 workshops being organised in India to address the issues, said senior officials.
“This is to find out ways banks can align with the government objective,” said Arijit Basu, MD, State Bank of India. There are over eight to nine issues that are being deliberated, including credit to infrastructure, micro, small and medium enterprises (MSMEs), Loans in 59-Minutes, educational and home loans under Pradhan Mantri Awas Yojana.
While Aadhaar architect Nadan Nilekani and former SEBI chairman UK Sinha gave reports on digital initiatives, and MSMEs loans, the branch level consultation is an effort to know from those who are in direct touch with customers to enquire about issues in credit delivery, Basu added.
In a letter by the Department of Financial Services (DFS) earlier this month, the timeframe, and guidelines on the issue have been clearly spelt out.
“Role of PSBs as active partners in the growth story, comparative rankings based on performance both within and across banks,” are among the vital points raised for discussions.
The next state-level meeting will be held on August 23 and 24. Further, review with the ministry and regulators will be held in September, dates for the same have not been specified yet.
“The consultations will cover eight thematic papers prepared by domain experts and will also include a review of the banks’ performance during the last five years and detailed discussions thereon. The consultative process will be aimed at alignment of banking with national priorities, stimulating ideas and inculcating a sense of involvement among bankers down to branch level,” said the DFS letter.
It has set terms on which the “alignment of banking with national priorities will be assessed”, from credit support for economic growth, infrastructure, doubling farmers income to ease of living and corporate social responsibility.
“With the economy at an inflexion point, the policy decisions taken now will define the future of the banking and its contribution to economic growth,” said Rajkiran Rai, MD & CEO, Union Bank of India.