Lend aggressively to perk up economy, FM tells PSBs

Lend aggressively to perk up economy, FM tells PSBs

Lend aggressively to perk up economy, FM tells PSBs

In a bid to provide the desired push to economic activities, the government has asked public sector banks (PSB) to give out loans aggressively to people and companies.

In a meeting with PSU bank heads, Finance Minister Arun Jaitley is understood to have told the lenders that with government planning new policy packages, demand will come in a big way from the real estate, construction, and infrastructure sectors.

The finance minister said this when the bankers complained of lack of demand for bank credit, according to sources attending the meeting on Friday to review the quarterly performance of PSBs.

Jaitley’s advice to the bankers came in the wake of the gross domestic advances (GDA) of PSBs declining from Rs 51.02 lakh crore in the March quarter, to Rs 49.71 lakh crore in the June quarter.

According to official data accessed by DH, barring the State Bank of India, the loan growth is almost nil in the big banks. Out of  27 public sector banks, there is credit growth in only six banks. These include Bank of India (2.2%), Andhra Bank (0.6%), IDBI (0.6%), State Bank of Hyderabad (1.3%), Sand tate Bank of Travancore (1.9%). Private sector banks, however, posted a credit growth of 2.27% in the June quarter.

In the meeting, the bankers were also asked to focus more on lending to SME and agriculture sectors. In terms of housing, they were told to concentrate on lending to priority sector housing.

Priority sector housing or affordable housing loans have witnessed a growth of 8.2% in the April-June quarter, up from 4.2% in the same quarter, last year. The growth inthe  overall housing loan too is up 18.4% in the June quarter, data shows.

Bankers were also asked to cut down on gross NPAs, which have grown to Rs 5.59 lakh, or 11.24% of their gross advances in the June quarter, from Rs 5.02 lakh crore in March.