Finance Minister P Chidambaram to meet heads of PSU banks today

Amid slowdown in economy and concerns over rising bad loans , Finance Minister P Chidambaram will review the performance of public sector banks (PSBs) on Saturday.

"The meeting of Finance Minister P Chidambaram with heads of PSU banks tomorrow will review issues related non-performing assets (NPA) of PSBs, private sector banks and measures for prevention of new accretion of NPAs," an official statement said.

"Credit to the agriculture sector and central schemes for facilitating agricultural lending and priority sector are also high on the agenda," it added.

This will be the first meeting of Chidambaram with the chiefs of PSU banks since taking over as the Finance Minister on August 1.

During, 2011-12, PSBs credit to agriculture sector was Rs 5,09,040 crore against the target of Rs 4,75,000 crore, the official statement said.

Other issues on the agenda include, lending to minority communities, educational loan scheme, performance of regional rural banks and achievements under the schemes like Swabhiman earmarked for financial inclusion, it added.

India's economic growth slowed to a nine-year low of 5.3 per cent in the last quarter of 2011-12.

Industrial growth, as measured by IIP, contracted 0.1 per cent during the April-June quarter of the current fiscal in a high interest rate regime that has been put in place by the Reserve Bank to rein in inflation.

Expressing concerns over the issue, Chidambaram recently indicated that he would prefer lower interest rates to spur investment and growth.

Slowdown in economy has impacted repayment capacity of borrowers. Gross NPAs of public sector banks increased to 3.3 per cent in 2011-12, from 2.3 per cent the year-ago period.

Besides, the country is facing drought-like situation in several parts, which too could pressure on bank loans.

In its monetary policy review last month, the RBI had cut growth expectations for the fiscal to 6.5 per cent, although Prime Minister's Economic Advisory Council Chairman C Rangarajan today pegged it at 6.7 per cent.

Heads of public sector financial institutions like Nabard, Sidbi, NHB, IIFCL and Exim Bank will also attend the meeting with the Finance Minister, sources said.