Union Finance Minister Arun Jaitley on Thursday said that there is an immediate need to give impetus to credit growth.
He said that credit growth, on year-on-year basis, declined to 10.0 percent in September 2014, with Public Sector Banks (PSBs) recording a growth of 7.9 percent.
Jaitley, who was making his opening remarks during the pre-budget consultative meeting with the representatives of banks and financial institutions here, further informed that growth in deposits also declined to 12.9 percent as of September 2014 from 13.7 percent as of March 2014.
Highlighting the government's major initiatives, Jaitley said that about 10.8 crore accounts have been opened till January 6, 2015, out of which around 60 percent are in rural areas under the Pradhan Mantri Jan Dhan Yojana (PMJDY) which was launched on August 28, 2014.
He said that banks have been asked to provide universal access to banking facilities under which all the six lakh villages in the country will be provided at least one basic banking account, per household, with indigenous RuPay debit card having inbuilt accident insurance of Rs. one lakh and life insurance cover of Rs. 30,000.
Jaitley said that an amount of Rs. 8487.4 crore was deposited in PMJDY accounts till January 6, 2015. He said that the number of RuPay debit cards issued as on January 6, 2015, stood at 8.88 crore.
Jaitley said that a top level retreat for banks and financial institutions called 'Gyan Sangam' was organized in order to create a platform for discussions on issues relating to banking sector reforms, achieve consensus on what went wrong and what should be done to improve and consolidate the position of Public Sector Banks (PSBs), get ideas from prominent experts in the field, and prepare a blue print of reform action plan.
He said that during the two day Bankers' Retreat, Prime Minister Narendra Modi assured that the banks would be run professionally, and there would be no interference.
Jaitley informed that in follow-up, the Ministry of Finance had issued a circular to PSBs, financial institutions and insurance companies assuring them of freedom of non-interference in matters of commercial decisions, transfers and postings etc.
The meeting was attended among others by Minister of State for Finance Jayant Sinha, Finance Secretary Rajiv Mehrishi, Revenue Secretary Shaktikanta Dass, Secretary (Expenditure) Ratan P. Watal, Secretary (DFS) Dr. Hasmukh Aadhia, Secretary (Disinvestment) Ardhana Johri, Chief Economic Adviser Dr. Arvind Subramanian, CBDT chairperson Anita Kapur and CBEC chairman Kaushal Srivastava.
Various suggestions were made by representatives of banks and financial institutions. Major suggestions include incentivizing digital/plastic payment in lieu of cash payments by giving one percent cash credit incentive and exemption from service tax to digital payments, digitization of profitable and capable primary agriculture credit societies about 30, 000 in number, measures to give impetus to credit growth, uniform stamp duty for mortgages, and measures for early settlement of disputes through DRTs including Lok Adalats etc.
Other suggestions include exemption from service tax to interest payments made to senior citizens under Vridh Awastha Bima Yojana, giving priority sector status to micro finance sector, and credit to Scheduled Caste and Scheduled Tribe youth for setting-up their enterprises to boost self employment among them, setting-up of Ambedkar Central Credit Guarantee Scheme to support SC/ST entrepreneurs among others.
Other suggestions include revised RBI Regulatory Framework for NBFCs to give them parity with banks and financial institutions, exemption from TDS on interest u/s 194 A of IT Act to NBFCs, Government requested to place Rs.1500 crore as share capital deposit with NABARD during 2015-16 to support the growing demand for agriculture credit, government asked to discourage populist ideas like agriculture loan write-offs and SHG loan write-offs etc.
