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Arun Jaitley tells bankers to spur credit growth

In his pre-budget consultation with the bankers on Thursday, finance minister Arun Jaitley made it clear that the government will not interfere in matters of commercial decisions. Jaitley, however, said that the banks need to give fillip to the credit growth, which has come down. In a two-hour-long meeting, the suggestions to North Block ranged from exempting online payments from service tax and giving 1% cash credit on such transactions.

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In his pre-budget consultation with the bankers on Thursday, finance minister Arun Jaitley made it clear that the government will not interfere in matters of commercial decisions. Jaitley, however, said that the banks need to give fillip to the credit growth, which has come down. In a two-hour-long meeting, the suggestions to North Block ranged from exempting online payments from service tax and giving 1% cash credit on such transactions.

Addressing the consultation, Jaitley said, "There is an immediate need to give impetus to credit growth. Credit growth, on year-on-year basis, declined to 10% in September 2014, with Public Sector Banks (PSBs) recording a growth of 7.9%. Growth in deposits also declined to 12.9% as of September 2014 from 13.7% as of March 2014."

According to the finance ministry, major suggestions included incentivising digital/plastic payment in lieu of cash payments by giving 1% cash credit incentive and exemption from service tax to digital payments, digitisation of profitable and capable primary agriculture credit societies about 30,000 in number, measures to give impetus to credit growth, uniform stamp duty for mortgages, and measures for early settlement of disputes through debt recovery tribunals, including Lok Adalats.

Bankers also called for exemption from service tax to interest payments made to senior citizens under Vridh Awastha Bima Yojana, giving priority sector status to micro finance sector, and credit to Scheduled Caste and Scheduled Tribe youth for setting up their enterprises, setting up of Ambedkar Central Credit Guarantee Scheme to support SC/ST entrepreneurs among others.

Other suggestions include revised RBI regulatory framework for NBFCs to give them parity with banks and Financial Institutions.

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