Chidambaram to meet PSU bank chiefs on Tuesday

By: admin
Updated: 21 Oct 2013 07:30 AM

New Delhi: Finance Minister P
Chidambaram will meet heads of public sector banks tomorrow to take stock
of their non-performing assets, credit growth and financial performance.

The broad agenda of the meeting include reviewing ways to cut down
deteriorating asset quality. Credit growth in the targeted sectors is also
a part of the agenda a senior finance ministry official said.

Gross non-performing assets (NPA) of public sector banks rose to Rs 1.76
lakh crore at the end of June quarter from Rs 1.55 lakh crore at March 31,

The ratio of gross NPA to gross advances for commercial banks rose from
2.36 per cent in March 2011 to 3.92 per cent in June 2013.

Besides, financial performance of public sector banks would also be
reviewed as the first half of the current fiscal is over, the official

The Finance Minister is expected to ask banks to give their assessment of
additional funding they would require to give loans at lower interest
rates to sector like auto, consumer durables, housing etc during the
festival season to stimulate the economy.

The decision to increase the quantum of capital infusion was taken at a
meeting between P Chidambaram, RBI Governor Raghuram Rajan and Economic
Affairs Secretary Arvind Mayaram in the national capital earlier this

"This amount (Rs 14,000 crore provided for capital infusion in Budget,
2013-14) will be enhanced sufficiently. The additional amount of capital
will be provided to banks to enable them to lend to borrowers in selected
sectors such as two-wheeler, consumer durables, etc at lower rates in
order to stimulate demand," a Finance Ministry statement had said.

Following the announcement, many banks including State Bank of India,
Oriental Bank of Commerce, Indian Overseas Bank have lowered lending rates
for buyers of automobiles and consumer goods.

As per the latest industrial output data, the output of the consumer
durables sector declined by 7.6 per cent in August, while the decline in
consumer goods segment was 0.8 per cent.

During the first quarter of the current fiscal, economic growth slipped to
4.4 per cent, the slowest pace in at least four years, dragged down by a
contraction in manufacturing and mining.

The country's gross domestic product (GDP) had expanded by 5.4 per cent in
the April-June quarter of the last fiscal. On a sequential basis, the
growth rate declined from 4.8 per cent in the January-March period of