Public sector bank chiefs will have a lot to discuss when they meet Finance Minister P Chidambaram on May 1 to get a broad direction from the government, the majority shareholder in 28 PSBs, for the strategy they should adopt in 2008-09.
High on the agenda will be a discussion on implementation of the Rs 60,314-crore (Rs 603.14 billion) farm loan waiver scheme by June 30.
The second important issue will be impact of the Reserve Bank of India's latest monetary measures and interest rates.
RBI's decision to raise the cash reserve ratio by 50 basis points is likely to dash any hopes of moderation in interest rates in the slack season (April-June) due to pressure on margin and profitability.
Also, there is a strong possibility that the finance ministry may ask PSBs not to raise interest rates to ensure that economic growth is not impacted in 2008-09.
As this is the first meeting of the state-run bank chiefs in the new financial year, the performance of the banks against the targets fixed in the Statement of Intent of annual goals for 2007-08 will also be reviewed. A fresh exercise will also be undertaken for finalising the statement of intent on deposits, advances, farm loans, and profit for 2008-09.
The financial services department has already got a feedback from all the public sector banks in the second week of April on issues relating to farm credit.
The implementation of the debt waiver scheme for farmers announced in the Budget 2008-09 will be an important priority for banks this year.
Banks, regional rural banks and cooperatives have already submitted data regarding overdue loans as on December 31, 2007 to the RBI and the government. Lenders are awaiting a scheme of implementation from the government in this regard.
