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NEW DELHI :
Finance Minister Nirmala Sitharaman will hold a review meeting with CEOs of public sector banks (PSBs) on Monday to discuss various issues, including raising funds, as part of efforts to shore up the economy affected by the COVID-19 crisis.
The meeting, to be held via video conference, will also evaluate banks’ transmission of interest rates to borrowers and advance the moratorium on loan repayments, people familiar with the matter said.
On March 27, the RBI cut the benchmark interest rate by 75 basis points and also announced a three-month moratorium for banks to grant relief to borrowers whose incomes were affected by the blockade.
Earlier this month, RBI Governor Shaktikanta Das held a meeting with the heads of public and private sector banks to assess the economic situation and review the implementation of various measures announced by the central bank.
The over-deployment of funds by banks under the reverse repo route can also be discussed on Monday, the sources said.
In addition, progress in long-term repo operations (TLTRO) for the NBFC sector and microfinance institutions (MFIs), and sanctions under the COVID-19 emergency credit line will also be reviewed.
Under the emergency line of credit, borrowers can take advantage of up to 10% of working capital limits based on existing funds, subject to a limit of ₹200 million rupees.
Public sector banks have sanctioned loans worth ₹Rs 42 billion for the MSME sector and companies since the start of the blockade.
The finance minister said Thursday that up to 3.2 million crore borrowers have taken advantage of the three-month moratorium plan for loan repayments announced by the Reserve Bank.
“The PSBs complemented RBI in the loan moratorium. Their effective communication and proactive actions ensured that more than 3.2 cr. A / c were worth a 3-month moratorium. Quick consultation repairs dispelled customer concerns.
Sitharaman also said that state banks have sanctioned loans worth ₹Rs 5.66 million to borrowers during March and April, and disbursement will begin shortly after the close is lifted.
She said banks sanctioned loans worth ₹Rs 77,383 million between March 1 and May 4 to provide a sustained flow of credit to non-bank finance companies (NBFCs) and housing finance companies.
In addition, under TLTRO, the total financing of ₹1.08 lakh crore was extended, “ensuring stability and business continuity in the future,” he had said.
Meanwhile, the IMF Sa-Dhan association, in a communication to the finance minister, said the sector expects to lend close to ₹Rs 50 billion over the next six months, mainly through emergency or surcharge loans to existing borrowers.
However, it expressed concern that there is a possibility of a collection deficit of more than 30-40% in September and a possible default by MFIs to their lenders to the extent of 10%.
There is likely to be an increase in demand from microfinance borrowers as they urgently need credit to rebuild their lives and stabilize their incomes.
However, field collections will be affected given the negative impact of the COVID-19 crisis on customer revenues, as well as uncertainty in post-closure operations in many districts, Sa-Dhan said.
Many of the medium and small MFIs will have difficulty covering their operating expenses in full, with a possible deficit of ₹1,500-2,000 crore. The industry employs about two lakhs of urban and rural youth, and keeping their jobs is also an obligation for the sector, he added.
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