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FM Arun Jaitley to meet heads of PSU banks this week

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arun jaitleyNew Delhi: Finance Minister Arun Jaitley will meet the heads of public sector banks on June 12 to review the banks’ annual performance and bad loans situation as also to persuade them to pass on RBI’s rate cut benefit to borrowers for propping growth.

Besides, the meeting will review credit offtake and the progress made under the Jan Dhan Yojana and Prime Minister social security scheme among other things, sources said.

Reserve Bank has cut repo rate by 0.75 per cent since January but not all the banks have passed on the benefit of lower interest rates to customers.

Last week, RBI reduced the short term lending rate (repo) from 7.5 per cent to 7.25 per cent. This was the third rate cut this year.

The sources said Jaitley will also deliberate on the issue of non-performing assets (NPAs) and discuss ways to contain this. Gross NPAs of PSU banks have gone up to Rs 2,60,531 crore as on December 2014, as per the RBI data.

The top 30 defaulters are sitting on bad loans of Rs 95,122 crore, which is more than one-third of the entire NPAs of public sector banks. It amounts to 36.50 per cent.

Terming NPAs at 5.2 per cent as high, Jaitley had said it is too early to consider the improvement in the bad loan situation last quarter as a “turnaround” and was keeping his fingers crossed.

“I would take it (drop in March quarter NPAs) only as an initial indicator. At times, when you try to revive the economy, some indicators can always be patchy…i am not drawing any final conclusion from this,” he had said.

“If this pattern continues over 2-3-4 quarters, then I will draw a conclusion that there is a pattern. I am keeping my fingers crossed,” he had said.

According to sources, during the quarterly meeting attended by heads of public sector financial institutions such as Nabard and NHB, the Finance Minister would also review the progress made with regard to decisions taken at the two-day Gyan Sangam.

Improving the performance of the PSBs and financial institutions, including through steps like capital infusion, would also be discussed in the meeting.

The Cabinet has already allowed banks to lower government stake to 52 per cent, which would enable them to raise capital from markets.

State Bank of India (SBI) and a few other public sector lenders are expected to raise funds of over Rs 16,000 crore from the market to meet their capital requirement.

The government has allowed SBI to raise Rs 15,000 crore and Oriental Bank of Commerce to mobilise Rs 1,000 crore from the market.


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