Union Finance Minister Nirmala Sitharaman on Thursday said that there was no liquidity crisis in private sector banks and expressed hope that demand would return to push the economy to grow faster. Sitharaman was addressing the press after meeting with private sector banks and financial institutions in New Delhi.
“The summary of what we have heard from NBFCs, mutual funds and the private sector banks is that I have not heard liquidity as a problem from anybody,” the finance minister said. “On the whole, it was a very tonic-like meeting where I heard good things, positive things... the message I got is that consumption is happening.”
Sitharaman said many of the micro-finance institutions and units told her that there is enough demand for loans. “Banks say there is a huge demand for loans under affordable housing,” she said.
She assured that the festival season will help revive the economy and that the slump in commercial vehicle sales is “cyclical” and is likely to pick up in the next one or two quarters. Sitharaman said she was told that sales was driven by “sentiments” and will improve in near future.
Finance Secretary Rajiv Kumar said public sector banks will hold an outreach programme in 400 districts across the country during the festival season to increase credit disbursal. Private sector banks have also been invited to join the outreach programme.
India’s economic growth rate had slipped to 5% in the April-June quarter, the lowest in over six years. Previously, the finance minister had also said inflation was under control and there were clear signs of a revival in industrial production. However, government data released showed that retail inflation rose to 3.21% in August, the highest in 10 months.
In her last press conference on September 20, Sitharaman had announced reductions in corporate tax rates for domestic companies and new manufacturing firms in a fresh bid to boost economic growth.
Last month, Sitharaman unveiled a mega plan to merge 10 public sector banks into four entities with robust balance sheets, withdrew higher taxes for foreign portfolio investors, gave startups exemption from angel tax, declared a package to address distress in the auto sector, and said the government would infuse Rs 70,000 crore in state-run banks.
Sitharaman had met the heads of public sector banks on September 19.
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