Chidambaram hints at help for stressed sectors
Finance minister P Chidambaram indicated that the government may help some of the stressed sectors like infrastructure, steel and construction to recover from the current slowdown and hoped that interest rates will come down to boost economic revival.
November 15, 2012 / 19:37 IST
Finance minister P Chidambaram indicated that the government may help some of the stressed sectors like infrastructure, steel and construction to recover from the current slowdown and hoped that interest rates will come down to boost economic revival. Addressing a press conference after a meeting with heads of public sector banks, he said, the Indian economy was not contracting like in many other countries but it is growing at a slower rate.
The Minister said government would soon finalise capital infusion for the PSU banks and the beneficiaries would include Indian Overseas Bank, Central Bank of India and Bank of Maharashtra. The government had proposed to inject Rs 15,000 crore of capital in the PSU banks. As regards issuance of new banking licences, Chidambaram said he had written to the Reserve Bank to initiate the process of issuing guidelines and start accepting the licences pending approval of the Banking Regulation Amendment Act by Parliament.Also Read: India to infuse capital into state-run banks: Chidambaram Referring to problems of some sectors, he said, "Non Performing Assets (NPAs--bad debts) is a problem that is a reflection of the slowdown in the economy. This is a reflection of some sectors which are under stress. So we will have to look at it sector wise and try to find ways and means as to which sectors need help to recover."If the economy improves, growth improves and the sector will recover. But in the meanwhile we will have to do some handholding and try to help these sectors recover."Chidambaram said RBI's guidelines do not prohibit restructuring of accounts just because a loan has become bad. "In fact it (RBI guideline) allows for restructuring of an account and a bit of handholding to help the sector or industry or the unit to tide through this difficult period and when the economy recovers, these account will indeed become standard accounts."I think all the chairpersons are sensitive to this matter and am sure we will see through this difficult period before the economy recovers and the accounts become standard accounts," he said.On RBI's recent decision to maintain status quo on interest rates, Chidambaram said, "it is a matter of judgement. The RBI has made its judgement. RBI also added two or three paragraphs at the end which points to the future and as I also said future is more promising".He said the recent Index of Industrial Production (IIP) figures do not reflect a trend. "I don't think there is a contraction in the Indian economy.Our economy is growing, it's growing at a slower rate."The Finance Minister said contraction is a wrong word to use. May be in one or two sectors, there is a bit of dip but overall the economy is not contracting. He said the banks can reduce interest rates only to some extent only and further lowering was not possible unless RBI brings down the key rates."Further benefit needed to be passed on to the consumers, interest rates have to come down. So we have to wait for that date when the interest rates come down", the Minister said.The RBI is slated to announce mid-quarterly review of monetary policy on December 18 and third quarter review on January 29. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
