Finance Minister Nirmala Sitharaman on Thursday hoped the economy will start looking up in the second half of the current financial year as consumption rises and banks increase their lending operations.
After meeting top management of private sectors banks, NBFCs, microfinance institutions and small finance banks, Sitharaman said that she had not heard of any liquidity problem from them. They also said there is enough demand for loans, she added.
Speaking at a press conference in Delhi, Sitharaman said: "I have not heard as a problem from anybody. Many of the MFIs and micro-finance units, which have come here from rural areas, said there is still demand and they are extending loans. On the whole, it was a very tonic-like meeting where I heard good things, positive thing," she said, and added that "the message I got is that consumption is happening," a PTI report said.
— CNBC-TV18 (@CNBCTV18Live) September 26, 2019
"Message I get from this meeting today is that consumption is happening. Demand will get back and motivate our economy to move at a faster rate. The coming half year, things will have to look up and pep up every other sector, even if there are one or two sectors in which there may be some stress," she said.
She indicated that economic slowdown seems to have bottomed out and the coming festive season will help the economy start looking up. The GDP growth in the first quarter of the current financial year slipped to an over six-year low of 5 percent.
The Finance Minister highlighted that the service sector is showing a very high appetite for credit. She said: "Today more than 50 percent contribution to the GDP of the country is from the service sector. There is an immense possibility to reach out to them, provided, of course, there are some simpler tweaking that we can do using their salaries and cash they earn also as a part can be used for their credit assessment."
The minister further said the private sector banks and financial institutions told her that the slump in commercial vehicle sales is "cyclical" and likely to pick up in the next one or two quarters.
As regards slowdown in the passenger vehicle segment, she was told that it was driven by "sentiments" and will improve in near future.
Sitharaman said that the affordable housing scheme, which the Central government launched recently, has really taken off well, according to ANI.
During the meeting, banks and non-banking financial companies (NBFCs) also suggested the limit for affordable housing eligibility should be raised to Rs 50 lakh from the current Rs 45 lakh.
On PMC bank crisis, the Finance Minister said, "At this stage, the RBI is handling it. Let a comprehensive picture to emerge. After that, the government will have to see what the best can be done so that there is some assurance given to the people who are affected."
Financial Services Secretary Rajiv Kumar said public sector banks will hold outreach programme in 400 districts across the country during the festival season with a view to enhance credit disbursal.
In the first phase between 3 and 7 October, 250 districts will be covered.
Private sector banks have also been invited to join the outreach programme.
Noted private banker Uday Kotak, who is attended the meeting, said private investment will respond to the reduction in corporate tax. He said most banks will follow external benchmark-based lending from 1 October.
Finance Secretary Rajeev Kumar said: "Festival season is coming. Therefore, we have all decided to join the outreach programme and step up their efforts in various districts."Kumar said, "In 400 districts, there would be an outreach programme. The outreach programme is essentially to just go to the districts and convey that banks have sufficient so as the Non-Banking Financial Company (NBFC)."
--With inputs from agencies
Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.
Updated Date: Sep 27, 2019 07:40:16 IST