Heads of select public sector banks will meet Reserve Bank Governor D Subbarao on Thursday to discuss a host of issues such as credit flow, stress in certain sectors and the possibility of a further lowering in key policy rates.
"The credit situation has improved significantly since January, which would be one among the topics that would be discussed in tomorrow's meeting," the head of a leading public sector bank told PTI in Mumbai.
Other issues likely to be discussed in the meeting include rising NPA levels in export-oriented sectors such as textile, manufacturing and chemicals and the impact of the stimulus packages in the economy.
The apex bank is likely to ask banks to enhance credit flow to the stress-ridden SME segment by restructuring the defaulted loans and providing adequate working capital.
The meeting assumes importance as the Reserve Bank is widely expected to drop its policy rates further to infuse additional liquidity into the market to provide support to the sagging economy.
Subbarao had recently said that the apex bank has enough headroom available for rate cuts, if the economic situation so demands.