The Reserve Bank of India (RBI) Governor Shaktikanta Das held a meeting with the chiefs of major public sector banks (PSBs) to get their feedback on the transmission of rates on Wednesday.
The meeting centred on the agenda of credit flow the micro, small and medium enterprises and non-banking financial companies (NBFCs). Stressing the need to have better coordination for a swift resolution of stressed assets, Shaktikanta Das talked about the progress on deepening digital payments through focused outreach activities planned by banks to make identified districts in each state and Union Territory digitally enabled.
The governor has been meeting PSBs chiefs at periodic intervals, pushing banks to pass on the rate deduction benefits to consumers for sufficient credit
“There has been some improvement in the banking sector. It remains resilient, even though the current economic conditions may pose certain challenges,” said Shaktikanta Das.
RBI press release said that the governor urged banks to proactively tackle emerging challenges swiftly, particularly with regard to stressed asset resolution in a coordinated manner.
The benchmark policy rate has come down to 135 basis points (bps) by MPC since February this year. The one-year median marginal cost of funds-based lending rate in the credit market has declined by 49 bps and the weighted average lending rate on fresh rupee loans sanctioned by banks declined by 44 bps. The monetary policy committee (MPC) was expected to cut rates to boost growth last week, but MPC kept the rate unchanged. The governor said they wanted to allow some more time for the previous rate cuts to play out.
The governor also took feedback in the meeting from PSBs heads on the issue of restructuring of stressed assets and the recovery from non-performing assets. The RBI has recently initiated insolvency proceedings against mortgage lender Dewan Housing Finance. Also, the new June 7 circular for the restructuring of stressed assets was put in place by the RBI for quicker resolution.