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RBI Governor Shaktikanta Das pulls up govt banks for poor credit growth

RBI Governor Shaktikanta Das enquired as to why bank credit growth was not picking up, asking bankers to get out of branches and develop connect with enterprises to push credit

twitter-logoBusinessToday.In | March 27, 2020 | Updated 11:23 IST
RBI Governor Shaktikanta Das pulls up govt banks for poor credit growth
RBI Governor Shaktikanta Das

Top officials from Reserve Bank of India (RBI), including Governor Shaktikanta Das urged public sector banks to improve their credit in a meeting with their heads. The meeting took place at RBI headquarters in Mumbai on Monday.

According to reports, RBI expressed its discontent over muted credit growth in banks. Latest RBI data shows that bank credit growth declined 8.5 per cent in January, as opposed to 13.5 per cent in the corresponding period last year.

Das questioned banks as to why credit growth was not picking up, CNBC-TV18 quoted a bank executive who attended the meeting as saying, adding that the RBI Governor asked bankers to get out of branches, develop connect with enterprises to push credit.

ALSO READ:Bank credit growth slows to 8.5% in January; personal loan up 17%: RBI

The central bank also asked lenders to avail of the long-term repo operations (LTROs) window to push credit to specific sectors, and not use it for treasury operations or otherwise, the CNBC-TV18 report said. A lot of public banks are sitting on a lot of liquidity and are not using the LTRO window, the report quoted another banker present at the meeting as saying.

In its February policy, the RBI had announced a one lakh crore long-term repo auction for banks to borrow one and three year loans at repo rate.

During the meeting today, the RBI also sought status report on resolution of cases under the June 7 circular issued by the apex bank on stressed assets.

ALSO READ:RBI may have a solution for Yes Bank's billion-dollar problem

Last week, while speaking at an event, Finance Minister Nirmala Sitharaman acknowledged that bank credit growth is yet to pick up, while emphasising that banks cannot be "wild" in writing loans. She had added that banks have been specifically directed to avoid mistakes of 2008-09, when excess lending to stimulate Indian economy led to an NPA crisis.

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