Private banks, financial institutions not facing liquidity problem: Sitharaman

After meeting top management of private sectors banks, NBFCs, microfinance institutions (MFIs)and small finance banks, Finance Minister Nirmala Sitharaman on Thursday said that she had not heard of any liquidity problem from them.

Speaking at a press conference here, Sitharaman said: "I have not heard liquidity as a problem from anybody. Many of the MFIs and micro-finance units, which have come here from rural areas, said there is still demand and they are extending loans. All of them clearly voiced a positive growth, which is a good encouraging story."

Sitharaman said that the affordable housing scheme, which the Central government launched recently, has really taken off well.

 

The Finance Minister highlighted that the service sector is showing a very high appetite for credit.

She said: "Today more than 50 per cent contribution to the GDP of the country is from the service sector. There is an immense possibility to reach out to them, provided, of course, there are some simpler tweaking that we can do using their salaries and cash they earn also as a part can be used for their credit assessment."

"On the whole, it was very tonic-like meeting, where I heard a lot of positive things. Not one voice said there was a concern, shortfall of demand. None of them voiced liquidity concerns," she said.

If there was a problem of liquidity, it was in the wholesale financing, and not in the retail, Sitharaman said.

On PMC bank crisis, the Finance Minister said, "At this stage, the RBI is handling it. Let there a comprehensive picture to emerge. After that, the government will have to see what the best can be done so that there is some assurance given to the people who are affected."

"Message I get from this meeting today is that consumption is happening. Demand will get back and motivate our economy to move at a faster rate. The coming half year, things will have to look up and pep up every other sector, even if there are one or two sectors in which there may be some stress," she said.

Finance Secretary Rajeev Kumar said: "Festival season is coming. Therefore, we have all decided to join the outreach programme and step up their efforts in various districts."

Kumar said, "In 400 districts, there would be an outreach programme. The outreach programme is essentially to just go to the districts and convey that banks have sufficient liquidity so as the Non-Banking Financial Company (NBFC).