BackState-run banks disburse over ₹2.5 tn in October: FinMin
Lenders held camps across 374 districts to reach out to potential customers for lendingOut of the ₹2.5 tn, ₹1 tn was given as new term loans, ₹46,800 cr as new working capital loans
PremiumNEW DELHI : State-run banks went on a drive to boost access to funds by large and small businesses, farmers and non-bank lenders, disbursing over ₹2.5 trillion, according to data released by the finance ministry.
An official statement from the ministry said that the banks held camps to reach out to customers for lending. The drive also covered efforts at individual bank branches which were not part of the camps.
To improve business’ access to funds, finance minister Nirmala Sitharaman had in September asked banks to reach out to customers and signal their willingness to lend while following all prudential norms. According to this, banks held outreach camps or loan melas across 374 districts in October.
Out of the total ₹2.5 trillion lent by state-owned banks, ₹1 trillion was given as new term loans while ₹46,800 crore was given as new working capital loans, the ministry statement said. “This is a turnaround story. Banks are fully capitalized and are in a position to meet any kind of credit requirement," news agency PTI said citing finance secretary Rajiv Kumar.
Credit to non-bank lenders stood at ₹19,627.26 crore in October, the statement said.
Data showed that corporate houses other than micro, small and medium enterprises (MSMEs) borrowed the maximum amount of ₹1.22 trillion in October . This was followed by farm loans of ₹40,504 crore and MSME loans of ₹37,210 crore. Home loans to the tune of ₹12,166 crore and vehicle loans of ₹7,085 crore were also given.
The government has in recent months taken steps to boost liquidity in the system, improve investments and complete stalled projects as economic growth decelerated sharply in the initial months of the Narendra Modi government’s second term. The central bank too has complemented the government’s efforts with a monetary stimulus. RBI had last month cut its policy rates for the fifth time this year taking the cumulative reduction so far this year to 135 basis points to support growth. RBI’s repo rate stands at 5.15%. The growth slowdown has made the government vulnerable to Opposition criticism about its ability to steer the economy.
One of the key steps taken to reverse the slowdown was a sharp reduction in corporate tax rate, but businesses are yet to make major investment announcements in response to that as the rate cut decision came in the middle of the fiscal year, that too in a surprise announcement.
The government has set a goal of doubling the size of the economy to $5 trillion over the next few years. The $2.7 trillion economy needs a real growth rate close to 9% in order to reach the $5 trillion-mark by 2024-25, assuming an inflation rate of 4%, according to an analysis by EY.
The government earlier this week said in Lok Sabha that there is a deceleration in economic growth but that did not amount to a slump. India’s economy grew at 5% in the second quarter, compared to 5.8% in the first quarter.
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