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FM to look at issues specific to regions

business Updated: Nov 23, 2009 21:44 IST
Mahua Venkatesh

Finance Minister Pranab Mukherjee is keen on focusing on local issues such as region-wise credit needs, disbursements and status of banking infrastructure at the forthcoming zonal meetings with public sector bank heads.

Other larger issues pertaining to consolidation, inflation and interest rates would also be taken up. Until now, region-specific issues have got little prominence in the quarterly reviews of the state-owned banks which have been held at national levels in New Delhi.

“Most regional issues get buried at the regular meetings and the focus is on the performance of a few banks, but with zonal meetings the finance minister wants to ensure that the spotlight is on all banks,” said a senior government official.

The finance minister is expected to touch upon the recapitalisation issue as well in the individual meetings.

The World Bank has sanctioned an amount of $3 billion or Rs 14,000 crore to the government for recapitalisation of state-owned banks. The exercise is likely to be completed by end of the next month. The fund would help these banks to shore up their capital adequacy ratio, while helping them to adhere to the stringent Basel II norms.

The low credit growth in the current fiscal is becoming a cause for concern for the government. The delayed monsoon has also led to a decline in agriculture credit demand.

Of the total agriculture credit, about 60 per cent is disbursed during the Kharif season. Public sector banks were given an agriculture loan target of Rs 3,25,00 crore in 2009-10.

Credit demand has not witnessed any significant increase despite the setting in of the Rabi season.

“There were expectations that credit need would be higher during the Rabi season especially with late rains but the demand has not seen any significant increase,” an executive at a government-owned bank, who did not wish to be identified said.

Mukherjee would have four separate meetings at Delhi, Mumbai, Chennai and Kolkata with the heads of government-owned banks to focus more on each zone.