Tag: credit flow

RRBs asked to focus on financial literacy, credit counselling to boost credit flow

Banking & Finance

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Regional Rural Banks should open financial literacy and credit counselling centres to improve credit flow, according to Brij Mohan Sharma, Executive Director of Canara Bank.

Addressing the officials of Karnataka Vikas Grameena Bank (KVGB) after naming the building of its head office in Dharwad as ‘Vikas Bhavan’ on Friday, he said RRBs are playing a significant role in rural development.

The main aim of RRB should be inclusive growth by promoting financial inclusion, financial literacy, accelerating priority sector lending, inculcating the repayment habits, and motivating the customers for digital banking.

Stating that more than 70 per cent of the people live in villages, Sharma said the standard of living of most has not improved as expected. He asked the branch managers to sanction loans without any inhibition so that the people below the poverty line could be brought up in the ladder of economic progress.

The Chairman of KVGB, P Gopi Krishna, said KVGB has been registering a good growth every year, and the business has crossed ₹27,800 crore now. The bank currently serves more than 2,045 villages with 629 branches, with an emphasis on lending, he said.

KVGB operates in nine districts of Karnataka. They are: Dharwad, Haveri, Gadag, Belagavi, Vijayapura, Bagalkot, Uttara Kannada, Udupi and Dakshina Kannada.

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Remain watchful of evolving situation, push credit flows: RBI Guv to banks

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Deputy Governors M K Jain, M Rajeswar Rao and a few other senior officials of RBI also attended the meetings.

RBI Governor Shaktikanta Das on Monday asked banks to remain watchful of the evolving situation and emphasised the importance of credit flow to sustain the nascent economic recovery amid rising coronavirus cases.

In his meeting with MD/CEOs of public sector banks and select private sector lenders, Das also highlighted the recent policy measures taken by RBI to further support the ongoing recovery while preserving financial stability, the central bank said in a statement.

Das touched upon the importance of credit flows in sustaining the nascent economic recovery and advised banks to remain watchful of the evolving situation and continue taking measures proactively for maintaining their business continuity, sharpening business strategies and raising adequate capital for strengthening balance sheets.

“He also emphasised the need for banks to maintain a close vigil on the payments and other IT systems operated by banks and fortifying those for enhanced efficiency and resilience so as to offer seamless and uninterrupted customer service,” RBI said.

Among other matters, progress in the implementation of COVID Resolution Framework, outlook on stresses assets and capital augmentation came up for discussion.

The liquidity scenario and monetary transmission, and credit flows to different sectors, including MSMEs, and retail, were also discussed during the meeting held through video-conferencing.

Deputy Governors M K Jain, M Rajeswar Rao and a few other senior officials of RBI also attended the meetings.

There are concerns that surging coronavirus cases and resulting localised restrictions might hamper cash flow and result in stressed assets.

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Slew of measures to enhance credit flow

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With a view to increasing the focus of liquidity measures on revival of activity in specific sectors, the RBI has extended the targeted long-term repo operations (TLTRO) scheme by six months till September 30, 2021.

By Ankur Mishra

The Reserve Bank of India (RBI) on Wednesday announced a slew of measures to enhance the credit flow into the system. The measures include liquidity support of Rs 50,000 crore for fresh lending during FY22 to all India financial institutions (AIFIs) like Nabard, Sidbi, NHB and Exim Bank.

Apart from it, the regulator has enhanced the loan limit for individual farmers to Rs 75 lakh from Rs 50 lakh against pledge of agricultural produce. The RBI has also extended the priority sector lending (PSL) classification benefit for lending by banks to non-banking financial companies (NBFCs) by six months.

“This dispensation which was available from August 13, 2019, till March 31, 2021, is being further extended for another six months, up to September 30, 2021,” the RBI said. In August 2019, RBI had decided that the bank credit to registered NBFCs for on-lending will be considered as priority sector lending.

With a view to increasing the focus of liquidity measures on revival of activity in specific sectors, the RBI has extended the targeted long-term repo operations (TLTRO) scheme by six months till September 30, 2021.

Raj Kiran Rai G, chairman, Indian Banks’ Association and MD & CEO of Union Bank of India, said the extension of on-tap TLTRO scheme and additional funding to AIFIs would help in providing resources for the needy segments of the economy.

SS Mallikarjun Rao, MD and CEO of Punjab National Bank, said, “While the liquidity has been ensured via TLTRO in case the demand picks up, the opportunity of on lending through NBFCs, enhancement of loan limit against warehouse receipts, liquidity facility for AIFIs are all good moves to ensure continued availability of credit which aid faster economic recovery.”

Anil Gupta, vice president, financial sector ratings, ICRA, said extension of the PSL scheme is positive and will further improve credit flow to NBFCs and HFCs for lending to identified sectors. “NBFCs and HFCs have benefitted by accessing the fresh funding lines at competitive rates while enabling banks to meet their PSL requirements with better risk-return perspective,” Gupta said.

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