Union Minister for Finance and Corporate Affairs Nirmala Sitharaman chaired a post-budget meeting with heads of Banks, Non-Banking Financial Institutions (NBFCs) and Financial Institutions in Mumbai today.

The meeting was attended by the Union Minister of State for Finance Bhagwat Kishanrao Karad; Sanjay Malhotra, Secretary, Department of Financial Services; Ajay Seth, Secretary, Department of Economic Affairs and V. Anantha Nageswaran, Chief Economic Adviser. The heads of all Public Sector banks, select Private Sector Banks, NBFCs and Financial Institutions were also present in the meeting.

Underscoring the importance of information sharing and collaboration, the Finance Minister exhorted all the banks to sign up to the Account Aggregator model which would facilitate seamless flow of credit for small borrowers and promote digital lending. The Minister directed that pilots for the Account Aggregator model and cash flow-based lending may be replicated in different regions around the country including in the North Eastern Region, on the lines of the initiative by two banks in the Varanasi district.

The meeting deliberated on the various budget announcements in the context of PM GatiShakti, Defence, Telecom, Manufacturing & exports, Emergency Credit Line Guarantee Scheme (ECLGS) and tax concessions to new manufacturing units and start-ups, which offer new opportunities to the financial sector.

The meeting discussed various schemes/programmes such as subordinated debt to MSMEs, KCC, Aatma Nirbhar Bharat Schemes and credit outreach programmes which provided immediate relief to the borrowers and the banks, from the impact of the Covid-19 pandemic. ECLGS, which has been enhanced to Rs. 5 lakh crore and extended up to 31 March 2023, was also discussed.

It was emphasised that digital banking, digital payments and fintech innovations are an opportunity for banks to find new ways to reduce the cost of intermediation and provide cost-effective services and that the benefits of digital banking should reach every nook and corner of the country in a consumer-friendly manner. It was further stressed that the banking industry should target to open accounts of unbanked adults under Jan Dhan Yojana and ensure Insurance/Pension coverage to all eligible adults.

It was highlighted in the meeting that with a record profit of Rs. 1.22 lakh crore in FY 20-21 and Rs. 0.79 lakh crore in HY 21-22, declining Gross NPA figures to 6.90% (as on Sep’21) from an all-time high of 11.20% (as on Mar ’18) and sufficient buffers with an all-time high CRAR of 16.5% (as on Sep ’21) against the regulatory mandate of 11.5%, banks are in a strong position to support future growth, enabling the country’s economy for a take-off.

The way forward for stepping up the lending activity and building a conducive credit environment for businesses and individuals was also stressed in the meeting.