With various industries complaining of not receiving adequate credit, the government has turned to micro-management by asking state-run banks to provide branch-wise credit flow data to various sectors.
Branch-wise data on lending will be compared with past pattern, and branch managers will have to explain if there is a slowdown in credit flow. In addition, the branch managers will have to furnish details on requests to increase the credit limit and action taken.
The government will also work to ensure that at the bank branch level, exporters and others are able to get credit much easier.
“This sort of micro management we need to do at each branch level. The Committee of Officers has discussed this and a mechanism is being worked out,” Commerce Secretary Gopal K Pillai said.
The government had constituted a Committee of Officers headed by Finance Secretary Arun Ramanathan to look into the problem and assist the apex panel headed by the prime minister for better policy intervention.
The government has realised that it requires not just the macro-management of putting funds into the banking system but it also requires much closer micro-management, Pillai added.
In the last two months, the Reserve Bank of India (RBI) has reduced key rates to infuse additional funds in the banking system and bring down interest rates to tackle a slowdown in the economy.
Pillai said some banks may be parking funds with RBI instead of lending to avoid risks. This is defeating the purpose of monetary relaxation to put money into the banking system for adequate lending at appropriate prices, he said.
With public sector banks insisting that they are giving credit to borrowers, the fortnightly data will give a clear picture where the money is going. The government may instruct the banks to lend more to sectors deprived of adequate loans.
During the public sector bank chiefs’ meeting with Finance Minister P Chidambaram on November 4, the latter had asked banks to provide fortnightly data on lending to various sector of the economy.
