Finance Minister Nirmala Sitharaman puts forth task of credit outreach for banks

Mumbai: Union Finance Minister Nirmala Sitharaman on Wednesday requested banks to work with all State governments to push the 'one district, one product' agenda, while advising public-sector banks (PSB) to adopt a nationwide credit outreach programme this year.

Banks have also been requested to have interaction with export promotion agencies, chambers of commerce and industry to understand and address the requirement of exporters on a timely manner, Sitharaman said, while addressing media here.

The Finance Minister, who is on a two-day visit to the financial capital, said between public-sector banks (PSBs), there should be some kind of a simple approach so that exporters are not made to run between one bank to another scouting for a better offer. During the day, she met heads of PSBs to review their financial performance.

Banks should go about to exhibit loan offerings in every district of the country in a bid to enhance the credit demand.A similar outreach programme was undertaken by the PSBs in which some private-sector banks also participated to boost credit offtake in the face of an economic slowdown.

"With changed times, now industries have option of raising funds even from outside the banking sector. Banks themselves are raising funds through various avenues. These new aspects need to be studied to target credit where it is needed," she said.

Sitharaman said that during her interaction with the chiefs of public-sector banks, it was highlighted that banks can play a crucial role by hand-holding industries from a particular sector to enable them to become an exporter and thereby play an important role in assisting One district one Product scheme suggested by the Prime Minister.

Shefurther said: "It's too early to say if there is a lack of demand for credit and announced a district-wise outreach to be undertaken by banks to help credit growth from October.A push to credit growth from such outreach efforts will also help the momentum set by the stimulus packages, which have been extended by the government since the onset of the pandemic.

It can be noted that in late 2019, banks had conducted the 'loan melas' in 400 districts to push up sagging credit growth. Even now, the credit growth is stuttering at around 6 per cent.

"I think it is too early to conclude whether there is a lack of demand… I don't think it is time yet to conclude that there is no credit pick-up. Even without awaiting indications, we have taken steps to ramp up credit," Sitharaman told reporters here.

She noted that over Rs 4.94 lakh crore was disbursed by the banks between October 2019 and March 2021 through the outreach initiatives undertaken by them.

"This year too sometime in October, there will be a credit outreach in every district of the country," she said.

Sitharaman added that the government had announced that credit up to Rs 1.5 lakh will be given to borrowers through NBFC-MFIs.

"In order to keep up the momentum of stimulus that we are periodically giving, we have also asked banks to go out and give credit," she said.

Meanwhile, Sitharaman said there is a need to ramp up credit growth in the eastern pockets of the country in states like Jharkhand, West Bengal, and Odisha, where the populations are displaying a higher propensity to deposit money in current and savings accounts.