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The finance minister has been actively making announcements over the past one month in an attempt to address the ailing economy.
On Aug. 23, she announced a slew of measures including the removal of the tax surcharge on foreign portfolio investors, front-loading of the Rs 70,000-crore bank recapitalisation plan and steps to revive the automotive industry.
In her second set of announcements on Aug. 30, Sitharaman outlined plans to merge 10 public sector banks into four. The bank mergers would help in better management of capital, she said. Sitharaman also announced a series of measures for state-run banks in the hope that the capital infused by the government into the lenders would result in stronger banks.
The finance minister has been actively making announcements over the past one month in an attempt to address the ailing economy.
On Aug. 23, she announced a slew of measures including the removal of the tax surcharge on foreign portfolio investors, front-loading of the Rs 70,000-crore bank recapitalisation plan and steps to revive the automotive industry.
In her second set of announcements on Aug. 30, Sitharaman outlined plans to merge 10 public sector banks into four. The bank mergers would help in better management of capital, she said. Sitharaman also announced a series of measures for state-run banks in the hope that the capital infused by the government into the lenders would result in stronger banks.
Last week, she announced a set of measures aimed at providing relief to the housing sector and boosting exports. The big announcement was the setting up of a special fund that will provide last-mile funding to affordable and middle-income housing projects that are stalled due to a liquidity crunch.
Finance Minister Nirmala Sitharaman will address the media after her meeting with heads of public sector banks to discuss various issues, including a follow-up on transmission of monetary policy rates.
The government is expected to ask state-run lenders to expedite the process of introducing loan products that are linked to the Reserve Bank of India’s repo rate in order “to step up affordable credit”, according to the agenda of the meeting.
Earlier this month, the RBI had made it mandatory for banks to link all their fresh retail loans to an external benchmark—effective Oct. 1—and the central bank’s repo rate being one such benchmark. Following the move, banks such as Punjab National Bank and Allahabad Bank announced linking their retail loans with the RBI’s repo rate.
The finance ministry officials will also discuss how banks can help customers in tracking online loan applications for retail, micro, small and medium enterprises, housing and vehicle loans, among others. It is set to ask top management of banks to closely monitor loans to MSMEs, small traders, self-help groups and micro-finance institutions.
They will also review the announcement made by the finance minister last month to mandate release of security documents within 15 days of loan closure. It is intended to help customers, especially in the corporate sector, who face difficulties in applying for various clearances due to pending loan repayment.
You can follow the updates of the finance minister’s press conference here:
Finance Minister Nirmala Sitharaman today instructed public sector banks to not classify any stressed medium and small enterprise as a non-performing asset till March 31, 2020. Sitharman said that the government has only invoked the RBI’s guidelines which are already existing.
Additionally, Sitharaman also announced a public outreach programme, a sort of loan fair, where retail customers can come and avail credit from banks and NBFCs.
The discussion was in great detail. Banks have started doing a lot on the announcements that were made and on some of the budgetary provisions.Nirmala Sitharaman, Finance Minister
The finance minister 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.
Banks have identified such NBFCs whom they can straight away lend. Some of that has already started happening, while some are in the pipeline.Nirmala Sitharaman, Finance Minister
Finance Minister Nirmala Sitharaman announced a public outreach programme by banks and NBFCs in 200 districts till Sept. 29 where retail customers can come and avail loans.
“This will happen in a public place, hopefully a shamiana (ceremonial tent), and will be available for people to see,” she said.
Banks, NBFCs who have now benefited from liquidity given to them, and retail customers who’d come and claim credit, will all be there. Scheduled banks will now show that they are indeed pushing liquidity to the NBFCs or directly to the customer.Nirmala Sitharaman, Finance Minister
The next 200 districts will happen between Oct. 10 and Oct. 15.
Finance Minister Nirmala Sitharaman said that state-run banks have been instructed to not declare any stressed MSME as a non-performing asset, even after 90 days of a default. Lenders have been told to do this till March 31, 2020.
Banks already have this power under the RBI’s existing provisions, Sitharaman said, adding that the government has only invoked these guidelines.
Sitharaman added that a special dispensation for farmers and MSMEs will be considered.
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