Consult With Branches To Improve Services, Government Tells State-Run Banks

The finance ministry has asked state-run banks to hold consultations with their regional branches to discuss ways to improve their market share and scale up credit to small entrepreneurs.

The consultation would take place along with their performance reviews, a senior government official told BloombergQuint requesting anonymity. That would be followed by a state-level review meeting of every public sector lender, the official said.

Rankings would be assigned to banks based on their state-wise and overall performance.

State-owned banks would be able to take suggestions to improve their services, and also improve their declining market share, the official cited earlier said. Suggestions would be sought to scale up their market share, and on how non-bank lenders are able to attract more customers despite charging higher interest rates.

Banks have been asked to share region-wise credit exposure to corporates, small businesses and individuals, and the reason for decline in lending to companies.

They have also been asked to share reasons for “steep” rise in soured assets during 2015-19, and non-performing assets that were not recognised in a timely manner, the official said.

Scaling Up Credit To Entrepreneurs

Banks have been asked to share region-wise percentage of Mudra loans advanced on a yearly basis, and the number of top 20 performing zones. Banks have also been asked to share the risk of Mudra loans turning into bad loans advanced by them. Banks' suggestions have been sought if the Mudra model can be expanded to loans of higher denominations.

Pradhan Mantri Mudra Yojana provides loans up to Rs 10 lakh to non-farm, non-corporate, micro or small enterprises.

The government has also sought an update from bank branches on a target given to them to onboard 100 merchants. Banks have also been asked to share the number of operative current accounts, and those that were digitally onboarded.