To increase credit disbursement during the ongoing festive season, finance minister Nirmala Sitharaman on Thursday directed commercial banks and non-banking financial companies (NBFCs) to reach out to customers across 400 districts in two phases before 15 October.Besides, Sitharaman asked banks not to declare stressed assets of MSMEs as non-performing asset (NPA) till 31 March 2020, invoking the existing guidelines of the Reserve Bank of India (RBI). “We have requested at bank level, the bank should sit with stressed MSME and work out a mechanism on how best they can come out even if it requires additional infusion of capital.”After meeting the heads of public sector banks (PSBs), Sitharaman said banks and NBFCs will visit 200 districts between 25 September and 29 September, in the first phase, to disburse credit to retail customers, farmers, and micro, small and medium enterprises (MSMEs). In the second phase, another 200 districts will be covered between 10 October and 15 October.“Banks will move their liquidity to NBFCs, and, NBFCs in turn, will pass it on to retail customers (new and old). Not just that, banks will also attend credit-seeking individuals, whether they are from any category—retail, farmers, MSMEs or anybody else,” she added.Minister of state for finance Anurag Thakur will depute ministers or MPs to attend these programmes and come back with a report on how it went, she said.During the review meeting, the finance minister asked the PSB heads whether there was any impact of the announcements made by the finance ministry in the last one month on the banking sector. Discussions were also held on the proposed merger of 10 PSBs into four bigger and stronger banks.Sitharaman also assured banks that the Centre will consider their request for a special dispensation for farmers and MSMEs. “For every old customer who wants credit (loan), five new (first-time customers) will be brought. That’s the thumb rule we have offered,” she said.“There exists a provision given by the RBI to ensure that MSMEs, if they are stressed assets…the RBI’s existing provisions empower banks to not declare them NPA even after 90 days. If possible, work out to restructure the loan so that he can get out of the difficult situation,” she said.Separately, the finance ministry said that there were discussions on the performance of the banks, with focus on supporting any need for credit, particularly for sectors such as NBFCs, housing finance companies (HFCs) and MSMEs, and any other sector under stress. “At the end of August 2019, overall credit growth in the banking sector stood at 10.1% on a year-on-year basis. This is in parallel with record recoveries and cleaning of bank balance-sheets showing better quality of asset book,” a statement said.Pool buy-out of NBFCs and HFCs between September 2018 and 15 September 2019 was at ₹93,018 crore, including the ₹9,155 crore under the newly launched partial credit guarantee scheme. “Proposals of another ₹33,200 crore under the new scheme are also in the pipeline,” she said.Banks have already entered into 14 tie-ups with NBFCs for co-originating loans, while 36 are in the pipeline. This will help borrowers in terms of better access to affordable credit, while yielding business benefits to both banks and NBFCs.