Managing non-performing assets is likely to top agenda at the meeting of bankers with Finance Minister P Chidambaram on Friday. |
"After a long time, he (Chidambaram) has added this in the agenda," H N Sinor, chief executive officer, Indian Banks' Association, said today. Chidambaram will meet heads of state-run banks to review their financial performance until September. |
The steep rise in lending rates in the last two years has resulted in higher incidence of defaults, mostly in retail loans. After burning their fingers in the race to spruce up their lending portfolio, banks are now purposely going slow on retail loans. |
In fact, the combination of higher rates and banks turning more cautious on retail loans have led to a sharp decline in credit growth. |
In the year to December 7, credit growth was 22 per cent compared with 29.3 per cent in the previous year. |
However, sluggish growth in credit is not expected to disturb Chidambaram, as the Reserve Bank of India in its April policy statement, projected a loan growth of 20-25 per cent in the current financial year. |
Chidambaram will also take stock of the number of new branches that banks will open by March. "RBI has given its approval for the branch licences. The finance minister may want to know the network pattern of banks," Sinor said. |
Lending to agriculture sector and packages for distressed farmers are some of the other issues that will be discussed in the meeting, he said. |