rediff.com
News APP

NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  gplay

Rediff.com  » Business » Govt to handhold stressed sectors: FM
This article was first published 11 years ago

Govt to handhold stressed sectors: FM

Last updated on: November 15, 2012 17:36 IST


Photographs: Edgard Garrido/Reuters PTI


Open to handholding the stressed sectors, Finance Minister P Chidambaram on Thursday said government will work out a strategy to assist industry segments reeling under the impact of economic slowdown.

"If the economy improves and growth improves, the sectors (which are not doing well) will recover. But in the meanwhile we will have to do some handholding and try to help these sectors recover", he said while addressing a press conference after meeting the heads of public sector banks in New Delhi.

...

Tags: , New Delhi

Govt to handhold stressed sectors: FM


Photographs: Reuters

The government will have to look at rising non-performing assets (NPAs) sector-wise and find ways and means to help them, he said, adding the "NPA is reflection of the slowdown in the economy".

The NPAs of the public sector banking group has increased by 0.98 per cent in the one-year period ending September 2012 mainly on account of the stress being faced in sectors like infrastructure, steel, construction, textile, food process and telecom infrastructure, the Minister said.

...

Tags: NPA

Govt to handhold stressed sectors: FM


Photographs: Yasir Iqbal/Reuters

On the positive side, Chidambaram said housing and automobile sectors have been doing well on back of decline in EMIs.

The minister said government would soon finalise capital infusion for the PSU banks and the beneficiaries would include Indian Overseas Bank, Central Bank of India and Bank of Maharashtra. The government had proposed to inject Rs 15,000 crore (Rs 150 billion) of capital in the PSU banks.

Referring to the issue of new banking licences, Chidambaram said he had written to the Reserve Bank to initiate the process of issuing guidelines and start accepting the licences pending approval of the Banking Regulation Amendment Act by Parliament.

...

Govt to handhold stressed sectors: FM


Photographs: Kevin Lamarque/Reuters

Stating that slowdown is a temporary phenomenon, the minister said the "situation is not alarming" and would improve with recovery and bad loans would become standard accounts.

"A bit of handholding (is needed) to help the sectors or the industry or the unit to tide through this difficult period...and when the economy recovers, these accounts will indeed become standard accounts", he added.

India's economic growth rate has slipped to nine-year low of 6.5 per cent in 2011-12 and the Reserve Bank of India (RBI) expects it to decline further to 5.8 per cent in the current fiscal. The first quarter of 2012-13 recorded a growth rate of 5.5 per cent, while the figures for the second quarter will be released later in the month.

...

Govt to handhold stressed sectors: FM


Photographs: Stelios Varias/Reuters

The latest Index of Industrial Production (IIP) data showed 0.4 per cent contraction in factory output in September on account of dismal performance of manufacturing and capital goods sectors. The industrial output again entered the negative zone after showing a 2.3 per cent growth in the previous month.

Referring to the issues concerning farming sector, Chidambaram said all Kisan Credit Cards (KCCs) would be converted into ATM cards and that agriculture sector credit disbursal target of Rs 5.75 lakh crore (Rs 5.75 trillion), up from Rs 4.75 lakh crore (Rs 4.75 trillion) in the last fiscal, would be met.

A new draft of the credit guarantee scheme would be placed before the cabinet in the next seven to ten days, the Minister added.

...

Tags: ATM , Chidambaram , IIP

Govt to handhold stressed sectors: FM


Photographs: Mukesh Gupta/Reuters

On the issue of NPAs in the banking sector, Chidambaram said RBI guidelines permit restructuring of loans.

"Just because an account has become an NPA, does not mean that it cannot be restructured. In fact it (RBI guidelines) allows for restructuring of an account. I think all the chairpersons are sensitive to this matter and am sure we will see through this difficult period (till) the economy recovers and the accounts become standard accounts", he added.

The banking sector, Chidambaram said, needs to play its role in giving a push to the economy by helping those sectors which have been facing the heat of slowdown.

...

Tags: RBI , Chidambaram , NPA

Govt to handhold stressed sectors: FM


Photographs: Reuters

There has been a sharp uptick in credit in housing and automobile sectors with increase in number of units sold, he said, adding the same has not happened as far as consumer durables and consumers non-durables are concerned.

"While the reduction in interest rates and the reduction in EMIs have indeed helped the housing sector and the automobile sector, it is not so evident in the consumer goods sector", he said, adding the banks cannot reduce interest rates further in absence of rate cut by the Reserve Bank.

The Minister said further benefits are "needed to be passed on to the consumers (and for that)... interest rates have to come down. So we have to wait for the date, when interest rates come down."

...

Govt to handhold stressed sectors: FM


Photographs: Reuters

The RBI is slated to announce mid-quarterly review of monetary policy on December 18 and third quarter review on January 29.

The Reserve Bank in its second quarter review of the monetary policy last month refrained from cutting key interest rates despite persistent demand from the industry and prodding from the finance ministry.

Answering questions on reluctance of the RBI to cut interest rates, Chidambaram said, "it's a matter of judgement. The RBI has made its judgement. As it said RBI has also added a two-three paragraphs at the end (in its half-yearly monetary policy review last month) which points to future and as I also said future is more promising."

...

Govt to handhold stressed sectors: FM


Photographs: Reuters

On the issue of capital infusion in the PSU banks, the Minister said, that the government has yet to allocate Rs 15,000 crore which was earmarked in the budget.

The top three banks which require capital are Indian Overseas Bank, Central Bank of India and the Bank of Maharashtra, he added.

Referring to 0.4 per cent contraction in the industrial output in September as against 2.3 per cent growth in August, Chidambaram said it did not reflect any trend.

"One month it's up and one month it is down. I cannot discern a trend in the IIP figures. I don't think there is a contraction in the Indian economy. The Indian economy is not contracting as in many other countries. Our economy is growing. It is growing at a slower rate. So I think contraction is a wrong word to use", he said.

© Copyright 2024 PTI. All rights reserved. Republication or redistribution of PTI content, including by framing or similar means, is expressly prohibited without the prior written consent.