Prime Minister Narendra Modi urged India's top lenders to fund bankable projects, undeterred by the non-performing assets (NPAs) generated in the past, and promised to fully back the executives. “The crucial role of the financial and banking system of supporting growth was discussed. It was noted that the small entrepreneurs, SHGs (self-help groups), farmers should be motivated to use institutional credit to meet their credit needs and grow. Each bank needs to introspect and take a relook at its practices to ensure stable credit growth. Banks should not treat all proposals with the same yardstick and need to distinguish and identify bankable proposals…,” the PM’s Office said in a statement after the meeting.
Modi also prodded bankers to push loans to MSMEs, farmers, micro-finance institutions and non-banking finance companies, which were provided special thrust during the package announced by finance minister Nirmala Sitharaman two months ago. The meeting came in the backdrop of concerns in the government that banks were parking funds instead of lending for productive use, which is seen to be crucial to revive growth. Bankers are risk averse as not just public sector executives but even those from the private sector, including the ICICI Bank top management, are facing corruption charges.
Modi used the platform to once again reassure banks, saying that he was strongly behind them and they should not have any fear. The PM said that no banker was in jail for taking a decision in the course of his duty. On their part, bankers suggested that there was a need for assurances on cash flows from projects and that development institutions such as Sidbi and IIFCL should be providing equity capital instead of competing with banks.
Banks suggested that they wanted to lend to individuals and small businesses based on data and sought support on the digital side. Currently, data on GST, income tax and credit history from Cibil database are available separately and it was proposed that this could be aggregated, which will help in faster decision making and instant processing.
