Finance minister Nirmala Sitharaman

NEW DELHI: Finance minister Nirmala Sitharaman on Thursday hoped that that the economy will start to move forward in the second half of the current financial year as consumption rises and banks increase their lending operations.

After a meeting with private sector banks and financial institutions, Sitharaman said that there have not been any concerns about liquidity or shortfall of demand, "On the whole it was very tonic-like meeting, where I heard a lot of positive things. Not one voice said there was a concern, shortfall of demand. None of them voiced liquidity concerns."

Sitharaman said that the message she got from the meeting was that things are looking forward, consumption is happening and there will be a revival in demand in the festive season.

The finance minister also said that the MFIs and micro finance units present at the meeting have all shared a positive growth story which is encouraging.

"Many of the MFIs and micro-finance units which have come here are in deep country, they said that in those areas there is still demand and they are extending loans. All of them clearly voiced a positive growth which is a good encouraging story," she said.

The minister further said the private sector banks and financial institutions told her that the slump in commercial vehicle sales is "cyclical" and likely to pick up in the next one or two quarters.

As regards slowdown in the passenger vehicle segment, she was told that it was driven by "sentiments" and will improve in near future.

Praising the growth trajectory in the service sector, the finance minister said, "The service sector is showing very high appetite for credit. There is immense possibility to reach out to them provided of course there are some simpler tweaking that we can do using their salaries and cash they earn also as a part can be used for their credit assessment."

Commenting upon the crisis in Punjab & Maharashtra Bank (PMC Bank), Sitharaman said that it is being handled by the RBI and government will have to wait for a comprehensive picture to emerge to see what can be done to give some assurance to the affected people.

Finance secretary Rajeev Kumar said that public sector banks will hold an outreach programme during the festival season with a view to enhance credit disbursal and private sector banks have also been invited to join. "In 400 districts, there would be an outreach program. The outreach program is essentially to just go to the districts and convey that banks have sufficient liquidity, so as the NBFCs (Non- Banking Financial Company)," he said.

The first round of bank outreach programme in 250 districts will be conducted on October 3 to 7.

During the meeting, banks and non-banking financial companies (NBFCs) also suggested that the limit for affordable housing eligibility should be raised to Rs 50 lakh from the current Rs 45 lakh.

Noted private banker Uday Kotak, who was also present at the meeting, said private investment will respond to the reduction in corporate tax. He further said most banks will follow external benchmark-based lending from October 1.

(With PTI inputs)



In Video: Economy to start looking up in the days ahead: FM Nirmala Sitharaman