FM Sitharaman asks banks to be more ‘customer-friendly’

Finance minister Nirmala Sitharaman said on Monday the government wants a sustained economic recovery and the Budget proposals on infrastructure-creation are aimed at realising this goal through heightened focus on capital spending, which has a high multiplier effect.

Addressing industry executives, large taxpayers and professionals during her first post-Budget meeting in Mumbai, the minister also asked banks to be a lot more customer-friendly while ensuring greater and smoother credit flow to critical sectors of the economy, including start-ups and small businesses, without compromising on prudential norms.

“The Prime Minister himself has told citizens that ‘I am the security behind you, please take loans, you don’t need to give security’. This is the thinking behind MUDRA and SVANIDHI schemes; and the performance in servicing the loan has been very good,” Sitharaman said.

Under the Mudra scheme, collateral-free loans are extended to small-time and budding entrepreneurs. A Rs 5,000-crore special credit facility for street vendors under the PM-SVANIDHI scheme was rolled out in June 2020 to help Covid-hit street vendors, who were eligible for an initial loan of up to Rs 10,000 to resume their businesses.

Interestingly, the finance minister sought industry’s views on what steps need to be taken by the government and what private sector can do in order to enhance employee diversity and women’s participation in the workforce and in the boardroom.

The Budget, Sitharaman said, has been designed, keeping in view the fact that the economy is recovering from a Covid-induced slump and recovery remains the focal point of the government intervention. “We have hence tried balancing the focus on growth and sustained recovery, continuing with the story of investing in public infrastructure building,” she said.

After a record 7.3% contraction in FY21, the real gross domestic product is estimated to grow 8.8% in the current fiscal. The Budget has projected a real growth rate of about 8% for FY23 and the central bank has pegged it at 7.8%.

“The Budget has chosen spending on infrastructure as the more favourable route to ensure greater multiplier effect, which will also result in asset creation which can last for several years,” she said.

The Budget has raised the Centre’s capital spending to a record Rs 7.5 lakh crore for FY23; in fact, capex will be doubled from the pre-pandemic (FY20) level. Citing an RBI study, Sitharaman recently said a rupee spent on capex had a multiplier of 2.45 in the first year itself, against that of just 0.45 on revenue spending.

Apart from finance secretary TV Somanathan, the meeting was also attended by economic affairs secretary Ajay Seth, revenue secretary Tarun Bajaj, Dipam secretary Tuhin Kanta Pandey, financial services secretary Sanjay Malhotra, chief economic advisor V Anantha Nageswaran, CBIC chairman Vivek Johri and CBDT chairman Jagannath Bidyadhar Mohapatra.

from Banking & Finance – The Financial Express https://ift.tt/uYQO8Dn