FM meets with PSB chiefs, says demand for credit will accelerate


Credit demand is expected to pick up in the economy on the back of growing retail segments, better macroeconomic prospects and improving financial health of borrowers, Finance Minister Nirmala Sitharaman said on Friday in a statement. review meeting with heads of public sector banks.

Even as the business outlook is gradually improving despite the headwinds of global development and the spread of Omicron, banks should strive to support sectors facing disruption due to the continued Covid attack, a- she declared. Sitharaman reviewed the performance of public sector banks with their CEOs and CEOs via a video link. Sectors with high contact intensity may need more support to help them fight the pandemic, she noted.

In recent stock exchange updates, major private banks reported credit growth of over 10 percent in the December quarter.


Assistance key

The finance minister stressed that while the business outlook is gradually improving despite the headwinds of global development and Omicron, banks should work to support sectors facing disruption due to the pandemic.

After remaining sluggish for some time, growth in credit to industry reached 4.1% in October, down from a contraction of 0.7% in October 2020. In absolute terms, outstanding credit to industry industry grew by Rs 1.13 lakh crore over one year. over one year to Rs 28.54 lakh in October 2021, according to the latest RBI data. This is largely facilitated by credit to medium-sized industries which recorded robust growth of 48.6 percent.

“During the review meeting, the bankers pointed out that the PSBs observed an improvement in the redemption culture in the country… The bankers were convinced that the PSBs are sufficiently capitalized and that the banks are prepared for any scenario of crisis in the future, “according to a statement from the finance department after the meeting.

Public sector banks, led by the State Bank of India, reported net profit of Rs 31,145 crore for the first half of fiscal year 2021-22, just slightly below annual profit of Rs 31,820 crore recorded during the previous financial year. “PSOs recorded annual credit growth of 11.3% personal loans, 8.3% agricultural loans and overall credit growth of 3.5%, as in September 2021. As part of the program of Credit Awareness Launched in October 2021, PSOs sanctioned a total loan amount of Rs 61,268 crore, ”the government said.

“Bank credit growth is showing signs of a gradual recovery, although the flow of credit to lower-rated companies remains subdued. Signs of emerging stress in micro, small and medium-sized enterprises (MSMEs) as well as in the microfinance segment require close monitoring of their portfolios ”,

according to the latest RBI Financial Stability Report released last month.


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