Union Finance Minister Nirmala Sitharaman on Wednesday said it is too early to say if there is a lack of demand for credit and announced a district-wise outreach to be undertaken by banks to help credit growth from October.
A push to credit growth from such outreach efforts will also help the momentum set by the stimulus packages, which have been extended by the government since the onset of the pandemic.
"It can be noted that in late 2019, banks had conducted the loan melas in 400 districts to push up sagging credit growth. Even now, the credit growth is stuttering at around 6 percent. I think it is too early to conclude whether there is a lack of demand I don't think it is time yet to conclude that there is no credit pick-up. Even without awaiting indications, we have taken steps to ramp up credit," Sitharaman told reporters.
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She noted that over Rs 4.94 lakh crore was disbursed by the banks between October 2019 and March 2021 through the outreach initiatives undertaken by them. This year too sometime in October, there will be a credit outreach in every district of the country, she said.
Sitharaman added that the government had announced that credit up to Rs 1.5 lakh will be given to borrowers through NBFC-MFIs. In order to keep up the momentum of stimulus that we are periodically giving, we have also asked banks to go out and give credit, she said.
Meanwhile, Sitharaman said there is a need to ramp up credit growth in the eastern pockets of the country in states like Jharkhand, West Bengal, and Odisha, where the populations are displaying a higher propensity to deposit money in current and savings accounts.
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Banks have also been asked to create state-wise plans for northeastern states to help the logistics sector and exporters. Apart from that, Sitharaman, who took a review meeting with the chiefs of all the 12 state-run lenders, said banks have been asked to reach out to exporters at the district level to help push the one district, one export message of Prime Minister Narendra Modi.
Besides, the Finance Minister said banks have also been asked to look into the demands of the fintech sector.