After a two-hour-long meeting with private sector banks, non-banking finance companies and housing finance companies, Finance Minister Nirmala Sitharaman said that none of the lenders complained about liquidity issues. Addressing the media after the meeting on Thursday, Sitharaman evinced hope that demand will return in most of the sectors.
"I have not heard liquidity as a problem from anybody here today," Sitharaman said at the beginning of the press briefing. "It has been a tonic-like meeting where I heard good news. Not one voice said there was a shortfall of demand. None of them voiced liquidity concerns."
"The message I get from this meeting today is that consumption is happening. Demand will get back and motivate our economy to move at a faster rate. In the coming half year, things look up and pep up every other sector, even if there are one or two sectors in which there may be some stress," Sitharaman said.
The Finance Minister said that even if there was a problem in liquidity, it was in the wholesale financing, and not in the retail.
Amid an ongoing slowdown in the economy, the government has been working to improve credit strength of the lenders so that they can infuse liquidity in several sectors and boost consumption.
"Many of the MFIs and micro-finance units which have come here are in deep country, they said that in those areas there is still demand and they are extending loans. All of them clearly voiced a positive growth which is a good encouraging story," Sitharaman said.
On the PMC Bank crisis, FM Sitharaman said that the government will wait till there is more clarity in the matter. "At this stage, RBI is handling it. Let a comprehensive picture emerge, post that the government will have to see what best can be done so that some assurance given can be given to people who are affected."
"People not coming forward to buy commercial vehicles seems to be a prevalent problems. This had happened a few quarters ago, and is happening again. The lack of demand in passenger vehicles is sentimental," Sitharaman said regarding the slump in auto sector.
Meanwhile, the bankers present at the meeting voiced their support towards the recent decisions taken by the government regarding the banking sector and economy, including repo-linked loans and corporate tax cut.
"It will be transparent as to how interest rates are charged to customers. There is nothing stopping us from implementing repo-linked interest rates today," veteran banker Uday Kotak said on linking loan products to repo rate.
"Corporate tax cut and lowering capital cost is a huge call to global investors. Banking system will be open to underwriting appropripriate projects." Kotak further said.
On a question regarding private lenders coming forward for the loan fairs in 400 districts, Sitharaman stated that a lot of them have shown interest in the project. Last week, the Finance Minister had asked public sector banks to hold open public meetings in 400 districts around the nation to approve loans to retail borrowers, including MSMEs, farmers and homebuyers, and NBFCs.
"I have invited private banks to participate in the loan fairs across 400 districts. Many of them have expressed interest in the initiative. Some of them already have their own projects going on," Sitharaman said.