Finance minister Jaswant Singh had his first interaction with bank chiefs today where the bankers flagged lack of credit offtake from the system as a major problem affecting them and suggested beefing up public investment.
A majority of the public sector bank chiefs met the finance minister individually for a few minutes each with sluggishness in the economy being on the agenda of most bankers. "We sought a helping hand from the government in trying to revive the economy," said a bank chief.
Some bank chiefs, however, described it as a courtesy call and said that there was not much on the agenda. They added that the finance minister did not raise any particular issues during the interaction. Today's meetings also assume significance as the consultative committee attached to the finance ministry is slated to meet on July 12.
For the last few months credit offtake has been a problem and despite signs of recovery in core sectors like steel and cement in the last few months, banks have not been receiving too many proposals seeking funds.
According to RBI data, during the fortnight ended June 14, bank credit had dropped by Rs 152 crore on account of a Rs 224 crore decrease in food credit.
At Rs 6,43, 884 crore, bank credit had increased by Rs 58,052 crore since the beginning of the fiscal. On a year-on-year basis credit growth is estimated at 24.7 per cent as against 15.5 per cent last year.
Bankers also appear worried about the performance in the first quarter of the current financial year, as trading profits that had propped up their bottom lines last fiscal had disappeared in the early part of the quarter.
