 "Chidambaram to meet PSU bank chiefs tomorrow")
The broad agenda of the meeting include reviewing ways to cut down deteriorating asset quality. Credit growth in the targeted sectors is also a part of the agenda a senior finance ministry official said.
Gross non-performing assets (NPA) of public sector banks rose to Rs 1.76 lakh crore at the end of June quarter from Rs 1.55 lakh crore at March 31, 2013.
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The ratio of gross NPA to gross advances for commercial banks rose from 2.36% in March 2011 to 3.92% in June 2013.
Besides, financial performance of public sector banks would also be reviewed as the first half of the current fiscal is over, the official said.
The Finance Minister is expected to ask banks to give their assessment of additional funding they would require to give loans at lower interest rates to sector like auto, consumer durables, housing etc during the festival season to stimulate the economy.
The decision to increase the quantum of capital infusion was taken at a meeting between P Chidambaram, RBI Governor Raghuram Rajan and Economic Affairs Secretary Arvind Mayaram in the national capital earlier this month.
"This amount (Rs 14,000 crore provided for capital infusion in Budget, 2013-14) will be enhanced sufficiently. The additional amount of capital will be provided to banks to enable them to lend to borrowers in selected sectors such as two-wheeler, consumer durables, etc at lower rates in order to stimulate demand," a Finance Ministry statement had said.
Following the announcement, many banks including State Bank of India, Oriental Bank of Commerce, Indian Overseas Bank have lowered lending rates for buyers of automobiles and consumer goods.
As per the latest industrial output data, the output of the consumer durables sector declined by 7.6% in August, while the decline in consumer goods segment was 0.8%.
During the first quarter of the current fiscal, economic growth slipped to 4.4%, the slowest pace in at least four years, dragged down by a contraction in manufacturing and mining.
The country's gross domestic product (GDP) had expanded by 5.4% in the April-June quarter of the last fiscal. On a sequential basis, the growth rate declined from 4.8% in the January-March period of 2012-13.