Banks were asked to should adopt technology similar to the fintech firms to increase credit penetration, increase ease for customers
Since March, the Reserve Bank of India (RBI) and the finance ministry have announced a slew of measures to help businesses tide over the covid-19 crisis
Prime Minister Narendra Modi met heads of top private and public sector banks and non-bank lenders on Wednesday and urged them to scale up lending to micro, small and medium enterprises (MSMEs) and agriculture and ‘relook at its practice’ to ensure stable credit growth, amid a disruption caused by the coronavirus pandemic.
An official statement from the Prime Minister’s Office on Wednesday said that lenders should not treat all proposals with the same yardstick. There is a need to distinguish and identify ‘bankable proposals’ and ensure that they don’t become bad loans.
The progress of schemes—the ₹3 trillion emergency credit line for the labour intensive MSME sector, additional kisan credit cards for the farmers, liquidity window for non-banking financial companies and micro finance institutions (MFIs), under the ₹20 trillion Aatma Nirbhar package—was also reviewed.
Banks were asked to should adopt technology similar to the fintech firms to increase credit penetration, increase ease for customers, lower costs for banks and also reduce frauds.
“It was a feedback-taking session with the prime minister. He told banks and financial institutions to continue to focus on economic revival. Banks have been assured support from the government," another official said.
On Tuesday, a statement from the Prime Minister’s Office said subjects of discussion would include credit products and efficient models for delivery, financial empowerment through technology, prudential practices for stability and sustainability of the financial sector.
Top officials from the finance ministry, including financial services secretary Debashish Panda, heads of State Bank of India, Punjab National Bank and Bank of Baroda, among others, were part of the meeting.
Since March, the Reserve Bank of India (RBI) and the finance ministry have announced a slew of measures to help businesses tide over the covid-19 crisis. However, a sustained rise in infections, and a partial lockdown in some states have continued to put businesses and lenders under pressure, with most of them expecting a second round of stimulus from the government.
Banks, particularly, may come under immense pressure. Last week, the central bank said non-performing assets are expected to rise to a 20-year high to 12.5% of total advances by March 2021. RBI warned that if the economic conditions worsen further, this may soar to 14.7% under the very severely stressed scenario.
Anuja contributed to the story.
Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.
Never miss a story! Stay connected and informed with Mint.
our App Now!!