Union Finance Minister Nirmala Sitharaman met the select private sector banks, Non-Banking Financial Companies (NBFCs) and Housing finance companies (HFCs) in New Delhi, on Thursday.
After her meet, she addresses the press with the details on the meeting. Here are the key takeaways from her briefing:
Liquidity not a crisis:
"Sum and substance of what I heard was that there is no liquidity crisis", she said. "If there was a problem of liquidity, it was in the wholesale financing, and not in the retail," said Finance Minister.
"On the whole it was very tonic-like meeting, where I heard a lot of positive things. Not one voice said there was a concern, shortfall of demand. None of them voiced liquidity concerns," she added.
Affordable housing scheme loans
"Loans for affordable housing scheme taken off well," said the Union Minister. "Demand from bankers to raise limit to Rs 50 lakh from current Rs 45 lakh," she said.
MFIs continue to extend loans in demanding areas
"Many of the MFIs and micro-finance units which have come here are in deep country, they said that in those areas there is still demand and they are extending loans. All of them clearly voiced a positive growth which is a good encouraging story," Sitharaman said.
PMC crisis handles by the RBI
"At this stage, RBI is handling it. Let there a comprehensive picture emerge, post that the govt will have to see what best can be done so that there is some assurance given to people who are affected," said Nirmala Sitharaman, regarding the Punjab Maharashtra Co-operative Bank's ongoing crisis.
PSB outreach in 400 districts
Finance Minister Nirmala Sitharaman said that the private sector banks will join outreach programme in 400 districts for potential lending. The first round of bank outreach programme in 250 districts on Oct 3 to 7, she said during the press briefing.
Credit assessment for the service sector
Finance Minister said that the service sector's contribution has been more than more than 50 per cent to the economic growth.
"The service sector is showing very high appetite for credit. There is immense possibility to reach out to them provided of course there are some simpler tweaking that we can do using their salaries and cash they earn also as a part can be used for their credit assessment," she said.
Automobile crisis
"Slump in commercial vehicle sales is cyclical; sentiments driving lower passenger vehicle sales," said the Finance Minster, quoting the private bankers.
Uday Kotak on private investment and corporate tax
Private investment will respond with reduction in corporate tax. Banks will be willing to underwrite such investments, says Uday Kotak, executive vice chairman and managing director of Kotak Mahindra Bank.
Most banks to follow external benchmark based lending from Oct 1, says Uday Kotak, after FM's meeting with private sectort bankers.