NEW DELHI: India’s economic growth is likely to look up in the second half of this fiscal year as consumer demand is expected to improve, finance minister Nirmala Sitharaman said on Thursday. Speaking after an interaction with private banks, Sitharaman said lenders told her that there was enough liquidity and demand for credit.

“On the whole, it was a very toniclike meeting where I heard good things, positive things,” she said, adding: “The message I got is that consumption is happening ” “None of those who were present today expressed any concern over liquidity,” Sitharaman said after her meeting with 29 heads of private-sector banks, non-banking finance companies (NBFCs), housing finance companies (HFCs), small finance banks (SFBs) and micro finance banks.

She said private banks were ready to support the government’s push for increase disbursal of credit before the festive season. Public-sector banks will start an outreach programme soon to reach borrowers in 400 districts.

“Today’s meeting tells me that things are looking forwards and upward,” said Sitharaman, adding that even though buying was low during the current 15-day period of “pitrupaksha” before the festive season, demand would pick up and push growth to a faster rate.

“In the coming half year, things will have to look up and pep up every other sector even if there are one
or two sectors in which there may be some stress,” said Sitharaman. India’s economic growth in the April-June quarter fell to a six-year low of 5%, triggering a raft of measures from the government to improve sentiment and lift demand.

Eight top private sector banks, five NBFCs, five HFCs, besides six SFBs and four MFIs met the minister to discuss the efforts to improve credit delivery.

Kotak Bank managing director Uday Kotak said private banks were ready to support the outreach programme. “What we really feel is that this is the opportunity for us when the government is going out there for us to do what is our dharma, which is to lend money prudently and rightly across the country,” said Kotak.

He also said that there was no pressure from the government to take more risks in lending. Bankers said there was particularly strong demand in rural areas with banks reporting growth. HDFC managing director Renu Karnad said there was strong demand, especially for affordable housing.

Sitharaman said private lenders asked for the threshold for affordable houses, which receive increased tax deductions, to be increased from Rs 45 lakh to Rs 50 lakh.

Small finance banks and non-deposit taking NBFCs expressed concern over the central bank restriction in their participation in co-origination of loans with public-sector banks.

Sitharaman said banks and financial institutions told her that the slump in commercial vehicle sales was “cyclical” and demand would likely pick up in the next one or two quarters. On passenger vehicles, the minister said she was told that the slowdown was driven by “sentiments” which would improve in near future.

Source : Times of India