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Fin Min reviews performance of banks with focus on supporting credit needs of various sectors including MSMEs

Updated: Sep 20, 2019 06:51:34am
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Fin Min reviews performance of banks with focus on supporting credit needs of various sectors including MSMEs

New Delhi,  Sep 20 (KNN) Discussions on the performance of the banks was carried out by Finance Minister Nirmala Sitharaman with focus on supporting credit needs of the economy, in particular the needs of sectors such as NBFCs, HFCs, MSMEs, sectors under stress and enabling better access to cheaper credit.

Discussions in this regard was carried out while reviewing the performance of the banks in a meeting with the top management of Public Sector Banks on Thursday.

Minister reviewed at length the implementation of series of measures, following extensive stakeholder consultations, announced since August 23, 2019, including consolidation, to support economic growth.

In a press release, Ministry of Finance said "Banks loan disbursement to key sector remains robust, with disbursement of Rs. 11.83 lakh crore done for MSME sector in FY 2018-19 as against Rs. 8.53 lakh crore done in FY 2017-18."

Following the announcement on August 23, 2019, banks have already entered into 14 tie-ups with NBFCs for co-originating loans, with another 36 such tie-ups in the pipeline, said Ministry.

This will help borrowers in terms of better access to affordable credit, while yielding business benefits to both banks and NBFCs.

Further, to enable automatic transmission of externally benchmarked rates, Ministry said that as many as15 Public Sector Banks have already introduced Repo-rate-linked loan products for housing and vehicles, consumer credit, cash credit limits and mortgage-based loans.

The remaining three Public Sector Banks will also be introducing such products by 1st October. These measures are aimed at considerable improvement in access to affordable credit.

To support decision-making and to prevent harassment for genuine commercial decisions by bankers, CVC has issued directions that Internal Advisory Committee in banks that would classify cases as vigilance and non-vigilance along with setting up of an advisory Board for first level examination to decide whether the case is a criminal act or a genuine commercial decision and accordingly, recommending the future course of action for large fraud cases above Rs 50 crore, it added.

This will instill a sense of protection among bankers from prosecution for genuine decisions and promote lending and Public Sector Bank heads expressed their resolve to take prudent commercial decision without any fear now.

Heads of concerned banks during the meeting assured Finance Minister that there will not be any disruption in credit decision making due to process of amalgamation and also that open communication to the employees and customers is being carried out for maintaining business as usual. (KNN/YV)

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