In the 10-hour long meeting, bankers chalked out ways to ensure better loan recoveries and easy credit disbursal.
Newly-appointed interim Finance Minister, Piyush Goyal, held a review meeting with public sector banks on January 28 to deliberate on wide-ranging issues including providing easy finance to micro, small and medium enterprises (MSMEs) and home buyers.
"Bankers held internal deliberations on various aspects of the functioning of PSBs... They discussed and deliberated on various measures to support the MSME sector, particularly, small traders, businesses and business owner at remote locations," Goyal said adding, "They discussed various measures to support finance for housing to homeowners."
In the 10-hour long meeting, bankers chalked out ways to ensure better loan recoveries and easy credit disbursal.
Goyal said banks reviewed measures to recover non-performing loans including Insolvency and Bankruptcy Code (IBC) and National Company Law Tribunal (NCLT).
"Bankers discussed their internal functioning to resolve cases under the RBI guidelines and within the framework under IBC," he said.
IBC was introduced in India in 2016, as the "last option" for recovering loans when "all other options fail". Under IBC, a resolution process has to be completed within a maximum period of 270 days (companies) and 135 days (individuals and smaller firms) since the initiation of the resolution process.
Rajiv Kumar, Secretary of Department of Financial Services expects the recoveries through IBC to be close to Rs 1.8 lakh crore during FY19. So far since 2015, loans worth Rs 2.8 lakh crore have been recovered. This includes Rs one lakh crore recovered this fiscal.
The RBI, in its bi-annual Financial Stability Report (FSR) said NPAs in the banking sector may reduce from 10.8 percent (registered in September 2018) to 10.3 percent by March 2019 and further to 10.2 percent by September 2019. The ratio was 11.5 percent at the end of March 2018.
Stressing more on credit disbursal and easy financing necessities, Sunil Mehta, Managing Director and Chief Executive Officer of Punjab National Bank said, the review meeting focused on "how the recoveries can be improved as well as (improving) our credit delivery system."
"It was a review meeting to discuss day to day issues and challenges of PSBs, how to give a boost to Pradhan Mantri Awas Yojana and giving thrust to MSMEs," Mehta said.
To boost affordable housing and achieve the vision of Housing for all by 2022, the government (Central and State) has undertaken several initiatives such as Pradhan Mantri Awas Yojana (PMAY) that aims to build one crore homes in urban and rural India by 2022.
Affordable housing has also been accorded infrastructure status, ensuring that developers in this segment have access to cheaper loans.
In early January, RBI had allowed one-time restructuring of MSME loans up to Rs 25 crore and under the standard category as of January 1, 2019, despite having defaulted on payment.
RBI Governor, Shaktikanta Das, also attended the meeting in the morning to express "expectations of the regulator" to the banks, even as it noted their expectations. "Basically, the idea was to convey to them the regulator's expectation from the banking sector in general and public sector banks in particular, and also to get from them their understanding of the current banking situation, and to get an understanding about the future outlook, the sense they have," Das said after meeting the bank chiefs.
Das said there was a "need for PSBs to extend credit while observing prudential norms but without excessive conservatism."
He also raised the issue of further strengthening various aspects of banking, including underwriting standards, capacity building, use of technology and governance.
