Finance Minister Nirmala Sitharaman said on Thursday that there are no liquidity-related problems being faced by private sector banks and non-banking financial companies (NBFCs). “Sum and substance of what I heard was that there is no liquidity crisis,” the Finance Minister said at a press conference after a meeting with representatives of banks, non-banking financial companies (NBFCs) and housing finance companies. Her meeting with the banking industry comes within a month of the government announcing a slew of measures to revive the economy, which is struggling against a six-year low growth rate and lakhs of job losses.
“If there was a problem of liquidity, it was in the wholesale financing, and not in the retail,” Ms Sitharaman said.
Issues such as liquidity, rate cut and credit disbursal were on the top agenda of discussions between the Finance Minister and the lenders, an official statement said.
Ms Sitharaman also said banks have been invited to participate in the credit outreach programme spanning 400 districts. The government had said last week that the public meetings between banks and borrowers will be held in two tranches.
“Many of the microfinance institutions and microfinance 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,” the Finance Minister added.
Describing the discussions as “a very tonic-like meeting”, Ms Sitharaman said: “The message I got is that consumption is happening.”
She also said that the service sector has shown “a high appetite” for credit.
Speaking on the automobile sector, Ms Sitharaman said that the low commercial vehicle demand is a cyclical problem. The slump in commercial vehicle sales is likely to pick up in next one-two quarters, she added.
She also said that the slowdown in passenger vehicle sales is driven by “sentiments” and would improve in near future.
Passenger vehicle sales plunged 31.57 per cent year-on-year to 196,524 units in August, falling for the 10th straight month, data from industry body SIAM showed this month. That marked the steepest fall in passenger vehicle and car sales ever.
All financial institutions are largely optimistic and hoping that the upcoming festive season would boost consumption and demand, the Finance Minister added.
India’s GDP or gross domestic product expanded 5 per cent in the quarter ended June, marking the lowest pace of growth in more than six years.
