Wednesday, June 16

Nirmala Sitharaman: Don’t let fear hamper lending, Nirmala Sitharaman tells banks

Finance minister Nirmala Sitharaman on Saturday told banks not to let fear of undue harassment by agencies stop them from lending, asking them to take decisions as per their own wisdom. “Genuine bonafide decisions are not being made by banks because of fear of what banks call undue harassment. No case goes to CBI without banks deciding to send it there,” Sitharaman said at a presser, adding that an internal committee by the banks will take a call on whether a case has to be referred to the CBI for suspicious activities.

Sitharaman said the Centre was doing everything to instill a sense of protection among bankers from prosecution for genuine decisions, and promote lending.

Public sector banks, the minister said, have been told to clear pending vigilance cases against their officials for alleged malpractices. The minister also said no Merchant Discount Rate (MDR) charges will be applicable on select modes of payment from January 1. The modes of payment will be notified soon, Sitharaman said after a review meeting with heads of public sector banks (PSBs).

In her Budget speech in July, Sitharaman had proposed to waive MDR charges to spur digital payments. “I, therefore, propose that the business establishments with annual turnover more than Rs 50 crore shall offer such low-cost digital modes of payment to their customers and no charges or Merchant Discount Rate shall be imposed on customers as well as merchants.

“RBI and banks will absorb these costs from the savings that will accrue to them on account of handling less cash as people move to these digital modes of payment,” she had said. Sithraman said the health of public sector banks which have been reeling under non-performing assets for the last few years has been restored and a total of 13 banks reported profits in the first half of the current fiscal.

Sitharaman was addressing the media after meeting the chiefs of public sector banks. A statement from the ministry noted that the gross NPAs of the state-run banks have declined from Rs 8.96 lakh crore in March 2018 to Rs. 7.27 lakh crore in September 2019.

“Extensive reforms carried out by the government have restored banks to health, with the gross NPAs of PSBs declining from Rs 8.96 lakh crore in March 2018 to Rs 7.27 lakh crore in September 2019, their provision coverage ratio rising to their highest level in seven years, and banks returning to profitability, with as many as 13 banks reporting profits in H1FY20,” the statement said.

It further said that with the Essar Steel resolution decision, banks have recovered Rs 38,896 crore, in addition to Rs 4.53 lakh crore recovered in the last four-and-a-half years. It said that PSBs have attached assets worth over Rs 2.3 lakh crore over the last three financial years.

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