Credit offtake of banks to pick up from June, says Vinod Rai
Banks Board Bureau to meet heads of public sector banks today to discuss bad loans issue
Credit offtake to industry, which has seen a decline in the recent past due to slowdown in certain sectors and issues related to bad loans, is likely to see an uptick from next month (June), Banks Board Bureau (BBB) chief Vinod Rai said on Thursday.
“Managing directors we have met are very confident with the kind of measures we have put in place. Lending process would start very quickly and you will see very healthy growth in the credit offtake of the banks,” Rai said after the third meeting of the bureau since being set up in February.
“We have given them comfort... You will see from the next month onwards,” he said after nearly four-hour long meeting.
The newly-constituted BBB will meet heads of public sector banks on Friday to discuss various issues, including ways to rein in bad loans. The bureau will be having meeting with each one of them separately, he said.
The bureau was constituted to help government select heads of public sector banks (PSBs) and financial institutions and assist banks in developing strategies with regard to capitalraising and consolidation.
Besides, it is looking at bringing the non-performing assets, or bad loans, down in public lenders. State-owned banks have been grappling with mounting bad loans, which hit a high of ₹3.61 lakh crore at the end of December. On consolidation, Rai said, it would happen in due course of time. The first priority is that lending process must start, second priority is vacancies must be filled up, said the former comptroller and auditor general of India. Asked if the PSBs would need more than ₹25,000 crore budgeted for the current financial year, he said, “once the results are declared, then we will get to know what is the requirement.”
He also said the passage of the bankruptcy law was very useful. “It strengthens the hands of lots of bankers. I think it will be very constructive.”
There are 22 state-owned banks in the country, including SBI, IDBI Bank and Bharatiya Mahila Bank. Besides the chairman, the bureau has three ex-officio members and an equal number of expert members.