MUMBAI: Rising bad loans of public sector banks and their priority sector lending are among the issues expected to be discussed when Finance Minister P Chidambaram meets PSU bank chiefs in New Delhi on Friday.
"The meeting is also likely to take a detailed stock of the financial inclusion activities of public-sector banks and the opening of new branches in the current fiscal," Indian Bank Association's senior vice-president, Prabhuta Vyas, said here.
Besides, a visible slow-down in retail credit has been included in the agenda of the meeting, Vyas said.
According to RBI, the growth in home loans has declined to 24.6 per cent at Rs 45,508 crore in 2006-07 from 38.3 per cent at Rs 51,273 crore in the year-ago period. The overall credit growth has slowed down to nearly 22 per cent as against nearly 30 per cent in the previous fiscal.
The credit-slow down may even prompt the finance minister to advise banks exercise a softening in the lending rates in the next fiscal, a senior banker felt.
"Though banks are forced to follow the market-determined lending rates, finance Minister is likely to ask banks to soften the interest rates by early next fiscal," he said.
According to RBI's estimates, rising NPAs in the agriculture sector has pushed up the NPAs of private sector banks in 2006-07, while a similar rise was visible in the bad loans of state-owned banks.
