Private Banks To Join Loan Melas In ‘One Country, One Financial System’
It’s ‘one country, one financial system’, says Uday Kotak as private banks pledge support to loan melas.
Private banks will join their state-run peers to participate in loan melas in 400 districts as the Modi government looks to push credit for spurring consumption in a slowing economy.
“We really feel this is an opportunity for us when the government is going out there for us to do our dharma—to lend money prudently and rightly across the country,” said Uday Kotak, chairman of Kotak Mahindra Bank, after a meeting with the finance minister.
Kotak said the outreach programme will enable private banks to grow their business ahead of the festival season. It would be a huge opportunity when banks have surplus liquidity, he said. “We don’t look ourselves as different parts of a different system whether its public or private sector. We are part of one financial system and one country.”
Finance Minister Nirmala Sitharaman on Sept. 19 had announced that state-owned banks, in collaboration with 178 non-banking and housing finance companies, will hold public meetings with borrowers for disbursing loans in 400 districts to boost demand in the festive season. The decision was part of the measures announced to counter a slowdown in consumption that dragged India’s growth to its lowest in six years.
Bankers believe that there is “robust demand and liquidity is not an issue”, Finance Secretary Rajiv Kumar told reporters. “Therefore, they have decided to participate in the outreach programme.”
The meeting with private banks was called after Sitharaman met public sector banks on Sept. 19. Executives of private banks, non-bank and mortgage lenders, and microfinance institutions met her today. Besides Kotak, others who attended the meeting include Anup Bagchi, executive director-retail at ICICI Bank; Nikhil Sahani, group president at Yes Bank; V Vaidyanathan, managing director at IDFC First Bank; Sanjay Gupta, MD at PNB Housing Finance; Sanjay Agarwal, MD, AU Small Finance Bank; and HP Singh, chairman of Satin Creditcare Network Ltd.
Sitharaman called it a “tonic-like meeting where I have heard a lot of good things, positive things and not one voice said there is concern”. Consumption would improve after 15 days with the beginning of the festive season, he said.
“From what has emerged today, I think demand will get back and motivate our economy to move at a faster rate,” She said. “In the coming half year, things will have to look and pep up every other sector.”