The Union Finance minister, Mrs. Nirmala Sitharaman, has met top executives of private banks and key financial institutions, who told her that demand was visible in rural India and among small borrowers, and that it would pick up further in the upcoming festive season.
Addressing reporters, the minister said no lender told her that there was any liquidity problem, and if there was any slight shortage, it was in the wholesale segment and not for retail customers. Moreover, appetite for credit remains strong in the services sector.
In a rather unusual sight, the media briefing also saw an active participation of key private players — from Uday Kotak, CS Ghosh and V Vaidyanathan to Renu Sud Karnad — who spoke at length on consumption in various sectors and expressed their desire to complement the government’s efforts to ensure greater credit flow to critical sectors.
Asked what steps the government would like to take to assuage concerns about the crisis-ridden Punjab and Maharashtra Cooperative Bank(PMC Bank), the minister said at this stage, the government was monitoring the situation and would intervene only if it was deemed necessary to protect the interests of depositors. 'At the moment, the RBI is doing its bit,' she added. The bank is facing restrictions and RBI has capped the daily withdrawal limit for depositors at Rs 10,000 for now.
Minister asserted that the slowdown in sales of commercial vehicles was seen by banks and NBFCs as cyclical, which will correct in 1-2 quarters.
Similarly, the fall in passenger vehicle sales has been mostly driven by sentiments. Sales of key auto companies, including Maruti Suzuki, which account for 85% of industry sales, reported close to a 32% decline, a record, in August from a year before.
As for housing, Sitharaman said she got a request from lenders to raise the ceiling of affordable housing from Rs 45 lakh to Rs 50 lakh.
“Today’s meeting tells me things are really looking up. The message I get is consumption is picking up and I think demand will only get better in the coming quarters and drive the economy to a higher growth trajectory,” Sitharaman said, describing the meeting with the banks and financial institutions as “tonic type”.