Narendra Modi: Fund bankable projects without any fear, PM tells bankers

NEW DELHI/ MUMBAI: Prime Minister Narendra Modi on Wednesday urged the country’s top lenders to fund bankable projects, undeterred by the non-performing assets (NPAs) generated in the past, and promised to fully back the executives.
During the meet, Modi also prodded bankers to push loans to micro, small and medium enterprises (MSMEs), farmers, micro-finance institutions and non-banking finance companies, which were provided special thrust during the package announced by finance minister Nirmala Sitharaman two months ago.
The Prime Minister reassured the assembled bankers that he was strongly behind them and they should not have any fear. He added that no banker was in jail for taking a decision in the course of his duty.
Banks need to introspect, relook at practices: PMO
The PM’s meeting with bankers on Wednesday came in the backdrop of concerns in the government that banks were parking funds instead of lending for productive use, which is seen to be crucial to revive growth. Bankers are risk averse as not just public sector executives but even those from the private sector, including the ICICI Bank top management, are facing corruption charges.
“The crucial role of the financial and banking system of supporting growth was discussed. It was noted that the small entrepreneurs, SHGs, farmers should be motivated to use institutional credit to meet their credit needs and grow. Each bank needs to introspect and take a relook at its practices to ensure stable credit growth. Banks should not treat all proposals with the same yardstick and need to distinguish and identify bankable proposals…,” the PMO said in a statement after the meeting.
On their part, bankers suggested that there was a need for assurances on cash flows from projects and that development institutions such as SIDBI and IIFCL should be providing equity capital instead of competing with banks.
Banks suggested that they wanted to lend to individuals and small businesses based on data and sought support on the digital side. Currently, data on GST, income tax and credit history from Cibil database are available separately and it was proposed that this could be aggregated, which will help in faster decision making and instant processing.
If there is one app for all the 50-odd government schemes, a customer can choose the scheme he is available for directly apply to the bank of his choice from the application, bankers suggested. This will ensure the straight-through processing of applications, they said.
On the infrastructure side, the bank said that on large projects like roads and power, cash flow risks because of toll collections or power purchase agreements should be dealt with so that the Invit (infrastructure investment trust) structure can be used for offloading infra loans after the project is completed.
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