The slowdown blues are not over yet. However, liquidity is not a problem, representatives of about two dozen private banks, small finance banks, NBFCs and mutual funds told Finance Minister Nirmala Sitharaman on Thursday.
"No one I have spoken to today has pointed out any problems with liquidity," said Sitharaman attending a media briefing after the day-long meeting. Many good things were also told to the finance minister about the latent credit demand that banks have been witnessing for the past few months.
"There is a certain positivity that banks could improve credit offtake if more liquidity is allowed to them," said Rajeev Kumar, secretary, department of financial services at the finance ministry, after the meeting.
Among the things discussed with representatives of private banks and financial institutions was last week's announcement by the finance minister. Banks were reminded that they would need to host 'loan melas' or fairs at remote locations in 400 demarcated districts across the country.
Giving their commitment to the finance minister's call, private banks said they are willing to host these 'loan melas'. “We are encouraged by the measures announced by finance minister to host 'loan melas' as this will also boost business potential for banks,” Uday Kotak, chairman, Kotak Bank, said at the meeting with the FM and other finance ministry officials.
Banks agreed to start with a list of 250 districts before the festive season. "We have not been coaxing anyone. Banks, NBFCs feel it could be good business opportunity for them," said Kumar.
Private banks and NBFCs have also demanded for more liquidity from the RBI to facilitate organising these 'loan melas' in remote areas. Banks said they are seeing enough demand for credit from these areas and from the salaried class.
Banks also informed that some relaxation should be done in the e-kyc norms of RBI so that consumers find it easy to change address after re-location. Banks also said for loan assessment, liquid cash with consumers or salary generated by them should be made a factor for their loan eligibility.
also read
- India fastest growing economy during last 3 financial years: Nirmala Sitharaman
- 'I don't have money to contest Lok Sabha elections': Nirmala Sitharaman
- Nirmala Sitharaman confident of India Inc aligning to country's developmental goals
- Sitharaman meets with top execs of 50 fintech companies; asks them to strictly comply with norms
- Paytm crisis: Nirmala Sitharaman to meet heads of fintech firms next week
The finance minister took note of the demands of the private financial institutions and banks and said she will work to ease their problems. The NBFCs had evinced that demand fall in commercial vehicle is a cyclical issue that has been prevailing for last few years.
Some banks also thanked the finance minister for the affordable housing scheme and said good response is being observed for housing loan disbursement under the government-incentivised scheme.
Banks requested the finance minister to increase the price cap of residential houses to Rs 50 lakh from Rs 44 lakh now, to boost demand for housing credit.
"If at all there is any liquidity issue, that is with the wholesale credit institutions, not in retail credit," Sitharaman said after the meeting. The finance minister said she was happy after hearing many unknown good things about the economy. "It was invigorating to hear so many good things about the economy," she added.
