|FM's Agenda: How to Reduce NPAs in PSU Banks|
asset quality, credit growth in the targeted sectors will also be discussed during the day-long meeting. Another issue likely to be discussed is the installation of ATMs, especially in the rural areas, by the PSU banks. As per the target fixed by finance ministry, in the remaining period of the current financial year, 26 public sector banks will together have to install 28,942 ATMs, or an average of 137 every day.
NPAs of the PSU banks have become a major major irritant with the largest public sector lender SBI's new chief Arundhati Bhattacharya saying that tackling NPAs will be her top priority after taking charge as the first ever woman head of the PSU bank. Gross non-performing assets (NPA) of public sector banks rose to Rs 1.76 lakh crore at the end of quarter ending June from Rs 1.55 lakh crore at March 31, 2013.
The ratio of gross NPA to gross advances for commercial banks also rose from 2.36 percent in March 2011 to 3.92 percent in June 2013.
The finance minister may also discuss ways to give loans at lower interest rates to sectors like auto, consumer durables, housing sector, etc during the festival season to spur growth. The decision to increase the quantum of capital infusion into the PSU banks was taken at a meeting between P Chidambaram, RBI governor Raghuram Rajan and economic affairs secretary Arvind Mayaram.
"This amount (Rs 14,000 crore provided for capital infusion in Budget (2013-14) will be enhanced sufficiently. The additional amount of capital will be provided to banks to enable them to lend to borrowers in selected sectors such as two-wheeler, consumer durables etc. at lower rates in order to stimulate demand," a finance ministry statement had earlier said.
Subsequently, many PSU banks including SBI, Oriental Bank of Commerce, Indian Overseas Bank have lowered lending rates for buyers of automobiles and consumer goods.
According to latest industrial data, the output of the consumer durable sector declined by 7.6 percent in August, while the decline in consumer goods segment was 0.8 percent.
India's GDP growth slowed to five percent in the year ended March from an average of eight percent over the past decade. The World Bank has also sharply lowered its forecast for India's economic growth to 4.7 percent from 6.1 percent for the current fiscal year. Last week, the International Monetary Fund (IMF) had also projected an average growth rate of about 3.75 percent in market prices for India.