Finance Ministry to hold review meeting with public sector banks today to discuss various issues

New Delhi: Finance Minister Nirmala Sitharaman will hold a review meeting with public sector banks (PSBs) on Thursday to discuss various issues, including follow up on transmission of monetary policy rates.

The government is set to ask PSBs to expeditiously introduce repo-rate linked products “to step up affordable credit”, according to an agenda item of the meeting.

The Reserve Bank of India (RBI) had earlier this month made it mandatory for banks to link all their fresh retail loans to an external benchmark - effective 1 October - and the central bank’s repo rate being one such benchmark. Following the move, banks such as Punjab National Bank and Allahabad Bank announced linking their retail loans with the RBI’s repo rate.

The finance ministry will also discuss ways in which PSBs can offer doorstep banking facility. Some PSBs offer doorstep banking for citizens over 70 years of age and differently-abled customers.

Additionally, the ministry will discuss how banks can help customers in tracking online loan applications for retail, MSME (micro, small and medium enterprise), housing, and vehicle loans, among others.

The finance ministry will ask the top management of banks to closely monitor “loans to MSMEs, small traders, SHG (self-help groups) and microfinance Institutions borrowers and collaboration of banks with non-banking financial companies for co-origination of loans”.

The Centre will also review the announcement made by the Finance Minister last month to mandate the release of security documents within 15 days of loan closure. It is intended to help customers, especially in the corporate sector, who face difficulties in applying for various clearances due to pending loan repayment.

The ministry will take a stock of pooled assets of NBFCs or housing finance companies purchased by PSBs, following a one-time credit guarantee of up to Rs 1 trillion announced in the Budget 2019-20.