Finance Minister Jaitley Stresses the need to Give Impetus to Credit Growth

New Delhi: Union Finance Minister Shri Arun Jaitley said that there is an immediate need to give impetus to credit growth. He said that credit growth, on year-on-year basis, declined to 10.0% in September 2014, with Public Sector Banks (PSBs) recording a growth of 7.9%. He further informed that growth in deposits also declined to 12.9% as of September 2014 from 13.7% as of March 2014. The Finance Minister, Shri Jaitley was making his Opening Remarks during the Pre Budget Consultative Meeting with the representatives of Banks and Financial Institutions here today.

Highlighting the major initiatives of his Government, the Finance Minister Shri Jaitley said that about 10.8 crore accounts have been opened till 6.1.2015 out of which around 60% are in rural areas under Pradhan Mantri Jan Dhan Yojana (PMJDY)which was launched on August 28, 2014. He said that banks have been asked to provide universal access to banking facilities under which all the six lakh villages in the country will be provided at least one Basic Banking Account, per household, with indigenous RuPay Debit Card having inbuilt accident insurance of Rs. 1.00 lakh and Life Insurance cover of Rs. 30,000/-. He said that an amount of Rs. 8487.4 crore was deposited in PMJDY accounts till 6.1.2015. He said that the number of RuPay Debit Cards issued as on 6.1.2015 stood at 8.88 crore.

The Finance Minister Shri Jaitley said that a top level Retreat for Banks and Financial Institutions called ‘Gyan Sangam’ was organized in order to create a platform for discussions on issues relating to banking sector reforms, achieve consensus on what went wrong and what should be done to improve and consolidate the position of Public Sector Banks (PSBs), get ideas from prominent experts in the field, and prepare a blue print of reform action plan. He said that during the two day Bankers’ Retreat, the Prime Minister assured that the banks would be run professionally, and there would be no interference. Shri Jaitely informed that in follow-up, Ministry of Finance had issued a circular to PSBs, Financial Institutions and Insurance Companies assuring them of freedom of non-interference in matters of commercial decisions, transfers and postings etc.

The meeting was attended among others by Shri Jayant Sinha, Minister of State for Finance, Shri Rajiv Mehrishi, Finance Secretary, Shri Shaktikanta Dass, Revenue Secretary, Shri Ratan P. Watal, Secretary (Expenditure), Dr Hasmukh Aadhia, Secretary (DFS), Ms. Ardhana Johri, Secretary (Disinvestment), Dr. Arvind Subramanian, Chief Economic Adviser, Ms. Anita Kapur, Chairperson, CBDT and Shri Kaushal Srivastava, Chairman, CBEC. The representatives of the Banks and Financial Institutions present during the meeting included Shri Urjit Patel, Deputy Governor, RBI, Ms. Arundhati Bhattacharya, Chairman, SBI, Shri S.K. Roy, Chairman, LIC, Shri M.S. Raghavan, CMD, IDBI, Shri H.K. Bhanwala, Chairman, NABARD, Shri S.B. Nayar, CMD, IIFCL, Shri T.M. Bhasin, Chairman, Indian Banks’ Association, Ms. Shikha Sharma, MD & CEO, Axis Bank, Shri Pramit Jhaveri, CEO, Citibank India, Shri Aditya Puri, MD, HDFC Bank, M.G. George Muthoot, Chairman, Muthoot Group, Shri Chandrasekhar Ghosh, CMD, Bandhan, Shri Pankaj Razdan, CEO & MD, Birla Sunlife Insurance, Shri Vijay Mahajan, CEO, Basix-Microfinance, Livelihood Institute, Shri M. Udaia Kumar, MD Share Microfin Limited, Shri Y.M. Deosthalee, CMD, L&T Finance Holdings, Shri Raman Aggarwal, FIDC, and Shri Milind Kamble, Dalit Indian Chamber of Commerce and Industry and among others.

Various suggestions were made by representatives of Banks and Financial Institutions. Major suggestions include incentivizing digital/plastic payment in lieu of cash payments by giving 1% cash credit incentive and exemption from service tax to digital payments, digitization of profitable and capable primary agriculture credit societies about 30, 000 in number, measures to give impetus to credit growth, uniform stamp duty for mortgages, and measures for early settlement of disputes through DRTs including Lok Adalats etc.

Other suggestions include exemption from service tax to interest payments made to senior citizens under Vridh Awastha Bima Yojana, giving priority sector status to micro finance sector, and credit to Scheduled Caste and Scheduled Tribe youth for setting-up their enterprises to boost self employment among them, setting-up of Ambedkar Central Credit Guarantee Scheme to support SC/ST entrepreneurs among others.

Other suggestions include revised RBI Regulatory Framework for NBFCs to give them parity with banks and Financial Institutions, exemption from TDS on interest u/s 194 A of IT Act to NBFCs, Government requested to place Rs.1500 crore as share capital deposit with NABARD during 2015-16 to support the growing demand for agriculture credit, government asked to discourage populist ideas like agriculture loan write-offs and SHG loan write-offs etc.

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OdishaInc Bureau