Twitter
Advertisement

Public sector banks to lend more to 'good, genuine borrowers', says finance minister

In the first stage, the banks will support companies with credit needs of up to Rs 200 crore

Latest News
article-main
Piyush Goyal
FacebookTwitterWhatsappLinkedin

Public sector banks have decided to support credit needs of genuine companies and focus on micro, small and medium enterprises (MSMEs), said interim finance minister Piyush Goyal on Tuesday after chairing a meeting of the government-run banks.

To ensure that credit flow to the "genuine, good borrowers" is not restricted due to the non-performing asset (NPA) problem, the government-run banks decided to make credit available to the industry in two phases. The meeting, which was attended by the CEOs of 13 banks including State Bank of India and Punjab National Bank, discussed the ways to increase credit availability to the industry and work on having better coordination among the government-run banks.

"In the first stage, the banks will identify and support companies with credit needs of up to Rs 200 crore, while good companies with borrowings between Rs 200 and Rs 2,000 crore will be taken up in the second stage," Goyal said.

Stressing on the need to work in consortium instead of working individually, he said, "Banks will take a covenant to work as a team, and not in silos."

To improve on consortium lending, a decision was taken to have "ground rules" for conducting consortium and multiple banking. "On the lines of the Insolvency and Bankruptcy Code (IBC), the bankers will follow the 66% rule to take decisions in a consortium. The banks will also have an inter-creditor agreement amongst themselves to sort out issues of consortium lending," he said.

The government would ensure viability of each and every bank, Goyal said. "PSBs will now concentrate on taking a focused decision. They are looking at an external committee to strengthen the banks' working to ensure that processes are followed and to examine whether these require to be upgraded," he said.

On the issue of NPA resolution, he said that a committee under PNB CEO Sunil Mehta has interacted with the bankers on the issue of formation of an Asset Restructuring Company or Asset Management Company. It is expected to give a report soon, he added.

Responding to a question on the depositors' concerns in the wake of several bank frauds, Goyal said that public money is extremely safe in state-owned banks and the government stands behind them. "Public money is extremely safe in public sector banks. Government stands behind them 100%," Goyal said.

He said, however, he was not sure how safe the public money was with private companies which have huge income tax dues. The frauds were perpetrated by private companies and not the PSBs, he added.

On the question of giving more powers to Reserve Bank of India (RBI), he said that the government was open to giving more powers to the RBI to regulate banks. " RBI has powers, but if additional powers are needed the government was open to the idea," Goyal said this in reference to a recent suggestion by RBI governor.

FULL THROTTLE

  • In the first stage, the banks will support companies with credit needs of up to Rs 200 crore
     
  • Good companies with borrowings between Rs 200 and Rs 2,000 crore will be taken up in the second stage
     
  • Banks will take a covenant to work as a team, and not in silos
     
  • Rs 9 lakh cr Non-performing assets with banks as of December 2017
     
  • 13 Number of public sector banks attended the meeting
Find your daily dose of news & explainers in your WhatsApp. Stay updated, Stay informed-  Follow DNA on WhatsApp.
Advertisement

Live tv

Advertisement
Advertisement