FM Sitharaman to meet bankers to assess loan disbursement to industry as economy reopens

The finance ministry said the two-day conference will focus on flow of credit into different sectors of the economy in a seamless manner

As the economy re-boots after the Covid pandemic, Finance Minister Nirmala Sitharaman has called a meeting of heads of public and private sector banks next week to assess the demand for credit to businesses and nudge the lenders to extend more loans to productive sectors of the economy.

The meeting has been called on November 17 and 18. Heads of other non-banking financial companies will also be in attendance.

The latest data from the Reserve Bank of India (RBI) suggests the share of loans to industry has dropped from 27 per cent to 26 per cent in the past year. Credit to small industries has not taken off yet in the way it should have.

A key MSME body Consortium of Indian Associations recently urged the government to create a separate ministry for micro-enterprises to help better cater to over 99 per cent of enterprises in the MSME category that are micro-units with a turnover of less than Rs 5 crore.

The personal loan segment, however, has been doing well, data suggests.

The Centre has already begun a credit outreach programme since the middle of October and disbursed nearly Rs 70,000 crore across the country. This includes Rs 21,687 crore of business loans and over Rs 4,500 crore of vehicle loans.

Industry associations have also been invited to the meeting to share their perspective on credit needs.

The finance minister will also take stock of bad loans of banks, which have declined to just over Rs 6 lakh crore as on March this year from nearly Rs 7.5 lakh crore in 2019.

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