FM, bankers to meet today to review loan disbursal

Finance Minister Nirmala Sitharaman will meet heads of public sector banks (PSBs) today to review their preparedness to shift to new norms of lending linked to repo rate, which seeks to make loans cheaper to retail borrowers as soon as the Reserve Bank of India lowers interest rates.

According to the new rule, effective October 1, all personal and retail loans will be linked to one of the four external benchmarks, which includes repo rate.

Other issues on the agenda are the state of bad loans in the public sector banks and the progress on one-time settlement policy on NPAs in infrastructure and manufacturing sectors, and door-step banking.

The lending to realty sector and stress on non-banking finance companies (NBFCs) will also be discussed threadbare along with the preparedness of lenders to give a final shape to bank mergers within the stipulated time frame of April 2020.

The meeting will be chaired by Sitharaman with Secretary of Financial Services, Rajiv Kumar, in the role to brief the minister on the nitty gritties.

The government had on August 30 announced the merger of 10 public sector banks into four big ones, seeking to bring down the total number of PSBs in the country to 12 from 27. Apart from that, it had also announced Rs 55,250 crore upfront capital infusion in the PSBs.

Those listed for merger included India's second largest public sector Punjab National Bank, Oriental Bank of Commerce, Canara Bank, Syndicate Bank, Union Bank of India, Andhra Bank, Corporation Bank, Indian Bank and Allahabad Bank. Of these, Indian Bank and Allahabad Bank boards have approval for the merger. The merged entity will be the seventh largest public sector lender of the country. Canara Bank board too has given approval for the merger with Syndicate Bank. Canara Bank has been designated as the anchor bank in this amalgamation.