RBI Governor takes stock of banking sector

New Delhi, Jan 28 (IANS) Reserve Bank of India (RBI) Governor Shaktikanta Das on Monday said he took stock of the banking situation and shared his expectations from the banks at a meeting called by Department of Financial Services (DFS).

Das said the DFS held a periodic review meeting with the banks and he attended it to get their understanding of the current situation of the banks in general and public sector banks (PSB)in particular.

"DFS has a periodic meetings... Basically the idea was that just convey to them what are the regulator's expectations from the banking sector in general and PSB in particular.

"And also to get from them their understanding of the current banking situation. And to get an understanding about what is the future outlook. What is the sense they have," Das said.

The day-long meeting chaired by DFS Secretary Rajeev Kumar is being attended by the chiefs of all the 20 PSBs.

While the interim budget is just four days away, the meeting gains significance as this may be the last meeting of state-owned banks before the government goes for Lok Sabha elections.

The banking sector has been facing a tough time managing the high non-performing assets (NPAs) which has placed half of the public sector banks in the Prompt Corrective Action (PCA) framework of RBI, restricting them from the usual lending business.

The government has been taking several measures including recapitalisation of some of comparatively healthy banks to help them get out of the PCA framework.

The government has hinted that four to five such banks may soon get out of PCA. It wants these banks to resume contributing towards improving the liquidity situation in the economy.

The economy is facing liquidity crisis since IL&FS Ltd and its subsidiaries defaulted in paying some of its dues last year. Credit has become scarce for both NBFCs and MSMEs hurting the overall economy.