Meeting comes in the backdrop of slowing GDP growth
Amid a slowing economy and a crisis in the shadow banking sector, Prime Minister Narendra Modi is likely to meet chief executives of Indian banks on June 21 to chalk out a blueprint for the banking sector for the next five years.
According to the bankers, they have been informed about the meeting, though a formal communication is yet to be received. The meeting assumes significance as the country’s GDP growth slowed to 5.8% in the January-March 2019 quarter, dragging down the full-year growth to a 5-year low of 6.8%. Credit flow to productive sectors of the economy has been impacted.
The interaction with Mr. Modi, who assumed the office of the Prime Minister for a second term last month, was indicated during a meeting with Finance Minister Nirmala Sitharaman last week. The Finance Ministry has been holding discussions with bank chiefs on improving lending to micro, small and medium enterprises, agriculture and other productive sectors of the economy, and also on ease of doing business.
The Ministry has also held discussions with banks on the ongoing crisis in non-banking financial sectors as NBFCs are facing liquidity crunch following the debt default by IL&FS. Bankers said the meeting could discuss the road map for public sector banks (PSBs) for the next five years in terms of growth and consolidation.
In its first term ended May 2019, the NDA government oversaw the merger of Dena Bank and Vijaya Bank with Bank of Baroda, as also the associate banks of State Bank of India with the latter.
There could be more consolidation among PSBs going ahead with the objective of creating size, bankers said.
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