Top bankers from state-run lenders will brainstorm for two days with finance ministry officials on November 11 and 12 in New Delhi to mull over ways to revive credit growth amid a sluggish economy.
The move comes days after the government announced a ₹2.11 lakh crore recapitalisation package, to be implemented over two years, for public sector banks.
The interaction, which will be on the lines of Gyan Sangam, an initiative started in 2014, will be attended by managing directors, executive directors as well as general managers of all public sector banks. Those GMsretiring after 2020 have also been asked to attend the meeting. The first edition of Gyan Sangam was held in 2015 and the second in 2016.
‘Wide-ranging chat’
Apart from discussions on boosting credit growth, the meeting is also expected to deliberate on issues such as stressed asset resolution process, human resource challenges and capital requirements, among others.
The country’s economic growth slumped to 5.7% in the first quarter of the current fiscal on the back of de-stocking, ahead of GST implementation and in the wake of continued impact of demonetisation of currency notes. Credit growth has been in single digits as there have been hardly any proposals for fresh investment in projects. Retail credit growth — affordable housing in particular — is the only silver lining, growing at a healthy rate.
Banks are also hesitant to extend fresh loans to corporates due to mounting bad loans, which have eroded their capital position. As many as seven banks are facing restrictions from the RBI on certain activities due to a rise in bad loans. Gross NPAs of banks, which touched 9.6% in March 2017, could rise to 10.2% by March 2018, according to the Reserve Bank of India.
The corporate sector, on the other hand, is over leveraged, and not in a position to make fresh investments. Bankers say reviving loan growth, a prerequisite for growth recovery, is a priority. Inviting GMs to the conversation also indicates the government’s intention to nurture talent for future leadership positions. This is probably the first occasion, in recent times, where general managers have been called for such a meeting.