PM Modi to meet bankers on Wed

Amid criticism that the country’s economy is running on only one engine ‘public investment’, Prime Minister Narendra Modi meeting chiefs of public sector banks to take stock of lending to private sector to spur growth on Wednesday.

The meeting will be held through video conferencing. “The meeting among other things will discuss the status of credit that banks lend to companies, businessmen, individuals and institutions,” a source familiar with the development told DH.

Investment by private sector is abysmally low since the past as many years. The top executives of private sector companies have said that it will take anywhere between 10 and 24 months for private sector investment to revive.

CEOs from companies like Larsen and Toubro and HSBC have said that they do not feel the need to add more capacity as they do not see big scope for growth in coming quarters.

A popular perception amongst the government is that the Reserve Bank of India is not coming forth with enough rate cuts to make loans cheaper for companies.

The government, from time-to-time, has been nudging the RBI to cut rates. But the apex bank under the new Governor Urjit Patel has handed out only two policy rate cuts by a cumulative 50 basis points.

Banks, however, complain that a huge NPA pile-up has been preventing them from the rate cut transmission. The Prime Minister is expected to discuss with the banks, the way forward for these problems.

The banks are expecting more capital infusion than announced under the Indradhanush scheme. Under the scheme, they were to get Rs 10,000 crore this year. But the government may give them around 2.5 times more to make a correction in their balance sheets.

Former prime minister Manmohan Singh had recently said that private investment had completely collapsed in the country and that the economy was running on the only engine that is public investment.