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MUMBAI / NEW DELHI :
The Indian government has stepped up efforts to push state banks to boost lending and has required lenders to submit a daily report detailing the volume and scale of sanctioned loans, according to industry sources and documents seen by Reuters.
The finance ministry, in a letter dated April 17 and seen by Reuters, asked banks to provide detailed data on new loans, including details on which sectors were obtaining them.
The momentum comes after a recent rate cut of 75 basis points by the Reserve Bank of India (RBI), and at a time when the banking system is full of liquidity pumped by the RBI to stimulate new loans and relive declining growth.
The Indian economy is in a slump with tens of millions of jobs in jeopardy amid a 40-day national blockade to stop the spread of the new coronavirus.
Despite the RBI’s push, several senior banking executives said lenders remain reluctant to turn on the tap amid fears of higher default rates with companies and jobs at risk.
India’s banking system is already recovering from nearly $ 140 billion in bad debt and needs more government guarantees before banks can actually start lending, said the bankers, who asked not to be identified as they were not authorized. to discuss the matter publicly.
Some of the bankers said that following the push from the Ministry of Finance, certain state banks had started to give branch-level targets to ensure loans were made, and branch managers were asked to clarify if the targets were not met. .
However, the government has not given the lenders any targets, one of the bankers said, adding that it was still a business decision.
The finance ministry and the Association of Indian Banks, an industry lender, did not respond to requests for comment.
The credit boost comes after loan growth in the last financial year stood at a low of 58 years despite several attempts by the government to boost credit growth.
It also occurs when the number of coronavirus cases in India exceeds 20,000 and some states consider extending their blockades.
“The whole business of lending is based on money back, so if there are concerns across the board now, how can banks lend?” said a senior executive at a public sector bank.
