Finance minister Nirmala Sitharaman said on Monday that the government plans to take policy measures “fairly quickly” to address the challenges plaguing the industry. She said also that the government is open to hearing out the grievances of foreign portfolio investors (FPIs).
The minister was speaking to reporters after meeting chief executives of private and state-run banks as she kicked off a series of meetings planned with various industry heads. She met the heads of State Bank of India (SBI), ICICI Bank, Axis Bank, Punjab National Bank and Kotak Mahindra Bank among others. The meeting also discussed the credit requirements of non-bank lenders, automobile industry and micro, small and medium enterprises (MSMEs), and the transmission of interest rate cuts to the economy.
“Behind the series of meetings is to hear them out and fairly quickly after that come out with something that will help those sectors…We are getting inputs from various sectors and trying to respond so that the confidence of those sectors is being restored,” Sitharaman said.
Over the next few days, the minister will meet representatives from several sectors —FPIs, automakers, industry associations, financial markets, MSMEs, industry associations and real estate to listen to their challenges. This is the first time the finance minister is meeting top executives in the second term of the National Democratic Alliance government, in a way acknowledging the ongoing economic slowdown and the government’s willingness to take inputs from businesses.
Sitharaman said the economic affairs secretary will soon hold talks with FPIs on their problems. There has been a massive outflow of overseas funds following the Union budget announcement to impose higher surcharge on some of these investors.
Bankers who attended the meeting sought the government’s intervention on tax notices asking lenders to pay service tax and Goods and Services Tax (GST) on minimum balance accounts. Banks will soon respond to the notices, Sitharaman said, adding Jan Dhan accounts and basic deposit and savings accounts do not attract any charges.
On the decision to borrow overseas in foreign currency, Sitharaman said she will not speculate on the number of tranches and the finance ministry has done nothing in this regard, besides the announcement in the budget, owing to commitments in the ongoing Parliament session.
During the March quarter, India’s economy grew at 5.8%, the slowest in five years. Growth in 2018-19 was 6.8%, down from 7.2% a year ago. Besides the slowdown in fresh private investments, subdued demand and stress at non-banking financial companies (NBFCs) are affecting growth.
In signs of a persistent slowdown, India’s automobile makers are finding it hard to sell vehicles, and NBFCs and MSMEs are struggling to access credit.
Overall credit growth continues to be at 12%, which is marginally lower than 13.3% at the end of March, the finance ministry said in a statement after the meeting.
“At the same time, with turnaround in the NPA cycle, high provision cover of over 75%, and record recovery, banks’ balance sheet are healthier than before. Banks are now, therefore, in position to step up lending,” said a finance ministry statement.
MoS for finance Anurag Thakur, finance secretary Rajiv Kumar, economic affairs secretary Atanu Chakraborty, expenditure secretary G.C. Murmu, revenue secretary Ajay Bhushan Pandey, RBI deputy governor NS Vishawanathan, were among those who attended the meeting.