Economy to start looking up: FM

Economy to start looking up: FM
Finance Minister Nirmala Sitharaman meeting with the private sector banks, in New Delhi, Thursday. (Twitter)
NEW DELHI, SEP 26 (AGENCIES) | Publish Date: 9/26/2019 10:24:04 AM IST

Finance Minister Nirmala Sitharaman on Thursday hoped the economy will start looking up in the second half of the current financial year as consumption rises and banks increase their lending operations.

Weeks after meeting public sector bankers, the finance minister met private sector lenders and financial institutions that, according to her, categorically stated they are not facing liquidity crisis. They also said there is enough demand for loans, she added.

“On the whole, it was a very tonic-like meeting where I heard good things, positive thing,” she said, and added that “the message I got is that consumption is happening”.

“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. In 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. She indicated that economic slowdown seems to have bottomed out and the coming festive season will help the economy start looking up. The GDP growth in the first quarter of the current financial year slipped to an over six-year low of 5 per cent.

She said private sector banks were not facing any liquidity crisis. “If there was a problem of liquidity, it was in the wholesale financing, and not in the retail,” Sitharaman said. She further said the private sector banks and financial institutions told her that the slump in commercial vehicle sales is “cyclical” and likely to pick up in the next one or two quarters.

As regards slowdown in the passenger vehicle segment, she was told that it was driven by “sentiments” and will improve in near future. On the passenger vehicle segment, Sitharaman said it was driven by “sentiments” and would improve in the near future.

She also said that private banks would join the government’s bank outreach programme in 400 districts for potential lending. The first round of bank outreach programme in 250 districts would run from October 3-7, she said.  “Many of the micro-finance institutions and micro-finance units which have come here are in deep country. They said that in those areas there is still demand and they are extending loans..

Sitharaman sounded optimistic about the service sector, saying it was showing a very high appetite for credit. “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,” she said.

Financial Services Secretary Rajiv Kumar said public sector banks will hold outreach programme in 400 districts across the country during the festival season with a view to enhance credit disbursal.

In the first phase between October 3 and 7, 250 districts will be covered.Private sector banks have also been invited to join the outreach programme.

During the meeting, banks and non-banking financial companies (NBFCs) also suggested the limit for affordable housing eligibility should be raised to Rs 50 lakh from the current Rs 45 lakh. Noted private banker Uday Kotak, who is attended the meeting, said private investment will respond to the reduction in corporate tax. He said most banks will follow external benchmark-based lending from October 1.


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