Nirmala Sitharaman meets banks, says did not hear of liquidity crisis

New Delhi: Finance Minister Nirmala Sitharaman met private sector banks, non-banking finance companies (NBFCs) and housing finance companies on Thursday, sources said. At the meeting, a number of issues were taken up for discussion like liquidity, rate cut, credit disbursal, the sources added.

The meeting comes as many NBFCs like IL&FS, DHFL and Altico have defaulted on interest payment availed from the banks, causing a credit crunch in the sector. Many banks have tightened the noose around credit flow, fearing large scale defaults on existing loans. The Finance Minister has announced a slew of measures in the past few weeks to rejuvenate the economy.

Here are highlights from the meetings:

1. Most banks to follow external benchmark-based lending from October 1, said Uday Kotak after FM's meeting with private bankers.
2. If there was a problem of liquidity, it was in the wholesale financing, and not in the retail, said Nirmala Sitharaman
3. On the whole it was very tonic-like meeting, where I heard a lot of positive things. Not one voice said there was a concern, shortfall of demand. None of them voiced liquidity concerns, said Sitharaman
4. Low commercial vehicle demand a cyclical problem, said Sitharaman
5. Sitharaman said private bankers told her, slump in commercial vehicle sales is cyclical; sentiments driving lower passenger vehicle sales
6. Affordable housing scheme has taken off well, said Sitharaman
7. Service sector showing high appetite for credit: Nirmala Sitharaman
8. There is immense possibility to reach out to them provided of course there are some simpler tweaking that we can do using their salaries and cash they earn also as a part can be used for their credit assessment, said Sitharaman
9. Loans for affordable housing scheme taken off well; demand from bankers to raise limit to Rs 50 lakh from current Rs 45 lakh: Sitharaman
10. Many of the MFIs and micro-finance units which have come here are in deep country, they said that in those areas there is still demand and they are extending loans. All of them clearly voiced a positive growth which is a good encouraging story: Finance Minister
11. Small banks seem to be going on a smooth map: Sitharaman
12. No shortage of liquidity says Sitharaman after meeting with the bankers
13. Most MFIs sees demand in rural India
14. Private sector banks will join outreach programme in 400 districts for potential lending: Finance Secretary Rajeev Kumar
15. Festival season is coming. Therefore, we have all decided to join the outreach program and step up their efforts in various districts, Kumar said