RBI Governor asks bankers to be watchful of macroeconomic situation

Mumbai: Amid global turmoil, Reserve Bank Governor Shaktikanta Das on Wednesday asked bankers to remain watchful of the evolving macroeconomic situation and take measures proactively so that the potential impact on their balance sheets is minimised.

The governor in his introductory remarks acknowledged the crucial role played by the commercial banks in supporting economic growth throughout the turbulent times since the outbreak of the pandemic and the ongoing financial market turmoil.

Das urged the bankers to remain "watchful of the evolving macroeconomic situation, including global spillovers, and take mitigating measures proactively so that the potential impact on their balance sheets is minimised and financial stability risks are contained." Despite challenges, he said, the Indian banking sector has remained resilient and continued to improve in various performance parameters.

Besides MD and CEOs of public sector banks and certain private sector banks, the meeting was also attended by Deputy Governor M. K. Jain along with a few senior officials of the RBI, the central bank said in a statement.

Among other matters, issues relating to lagging growth in deposits vis-à-vis credit growth, asset quality, investments in IT infrastructure, adoption of new-age technology solutions, functioning of Digital Banking Units, etc. were also discussed.

As per the Reserve Bank of India (RBI) data, deposits rose by 9.6 per cent as compared to 10.2 per cent on a year-on-year basis, while credit offtake witnessed a 17.9 per cent jump as against 6.5 per cent a year ago.

The robust growth performance in the first half of the current fiscal has been ably supported by a well-capitalised banking system that witnessed an upswing in credit disbursement to the retail, industry and services segments.

Non-food credit growth almost doubled from 8.7 per cent in March 2022 to 16.4 per cent in September 2022, reflecting not only an acceleration in the growth of current economic activities but also an anticipation of continued acceleration in the future as well.

The growth in credit to industries has been driven by an increase in bank credit to MSMEs aided by the ECLG scheme.

In August, the Union Cabinet approved an additional Rs 50,000 crore under the Emergency Credit Line Guarantee Scheme (ECLGS) to ensure low-cost credit flow to hospitality and related segments hit hard by the COVID-19 pandemic.

The limit for ECLGS increased from Rs 4.5 lakh crore to Rs 5 lakh crore, with the additional amount being earmarked exclusively for enterprises in hospitality and related sectors.

The enhancement is expected to provide much-needed relief to enterprises in these sectors by incentivizing lending institutions to provide an additional credit of up to Rs 50,000 crore at a low cost.

The ECLGS was announced in May 2020 in wake of the outbreak of COVID-19 to help various sectors, especially in the MSME segment, to get credit at a concessional rate of 7 per cent. Loans of about Rs 3.67 lakh crore have been sanctioned under ECLGS till August 5, 2022.